Introduction to the mortgage world
Mortgage product transfer explained.
Your current lender’s standard variable rate has increased, and you are considering moving onto a fixed-rate mortgage plan. If you are happy with your current lender and you want to keep the loan amount the same then this would be classed as a product transfer. You are moving from one product to another with the same lender.
What does the product transfer process look like?
Typically, this process is straightforward. They can usually be quickly arranged with your lender. You may need to do an affordability check but not all lenders require this. Instead, they will complete an income and expenditure form. Provided the credit check is approved the borrower will need to sign the product transfer document. Some lenders will need to do a re-evaluation of income, and some may not.
A big advantage to some that have had a change in their circumstances such as a reduction in their income or moving from an employed position to a self-employed position is that most lenders will not require to assess the income for the application. Another scenario where a product transfer / product switch may be the most appropriate solution is if a someone has had an adverse change to their credit profile as again most lenders will not require an application to be credit scored.
Fees and rates when transferring
Mortgage product transfer fees vary from lender to lender. Standard product transfers are a lot less hassle than a new mortgage application or remortgage. In many cases it can be the cheaper option.
One of the biggest reasons borrowers opt for an alternative to product transfers is the rates they are on with their current lender. The rate you are paying maybe a lot higher than your lenders competitors. In this situation some are tempted to change provider, which would then be re-mortgaging. When re-mortgaging it is important to bear in mind that these tend to take longer to arrange and there are much more steps involved. It can turn out to be more costly so always make sure you can justify the associated fees in relation to the interest you would save by switching products.
- Fewer fees over due to fewer stages and people involved in the transfer process.
- Less paperwork (which can be a huge bonus for some)
- In most cases you will need to have a full valuation.
- There are usually no legal steps or fees to pay.
If you’re looking to change your mortgage terms with your current lender or re-mortgage with an alternative provider, the process can be a slightly more complex with a buy to let than a residential property.
You may have access to fewer providers, those that are willing to lend may have stricter eligibility requirements surrounding the loan to value (LTV) ratio, income and the provider will need to feel confident that the projected rental income is sufficient to keep up with the mortgage payments.
For more information on product transfers please give us a call today on 08081 511 807 and we will be happy to help.