Choosing between a remortgage and a product transfer is not always straightforward. In this blog, we outline the differences between the two finance options to help you decide.
Finding the right new finance option for you, whether with a remortgage or a product transfer, is essential. Many factors will impact this decision, such as rate pricing, lender criteria, costs, and much more.
The key difference between the two is the lender. With a remortgage, you move to a new lender to access a better rate option, whereas a product transfer allows you to access your current lender’s new pricing.
To make the right decision, it’s crucial you understand the differences and speak with a whole-of-market mortgage broker to find the best rate for your needs.
The Benefits of a Remortgage
A remortgage has typically always been more popular amongst landlord clients than a product transfer. This is because of the number of benefits on offer.
- Access lower interest rates: Having your broker search the whole market for a new deal rather than staying with your current lender will likely allow you to access more competitive rates and flexible lending criteria.
- Release equity to boost your property portfolio: With a remortgage, you can release equity in the property to fund further investment purchases and consolidate any debts across your properties to bring your mortgage costs down.
- Get peace of mind with your property investment decisions: Remortgaging allows you to review your current mortgage and ensure your investment is performing at its best. With expert guidance from your broker, you can explore ways to reduce your mortgage costs and access more competitive deals. It also means you can be confident you’re on the best available rate for your specific circumstances.
However, if you choose to remortgage, you’ll need to consider several factors.
As you move to a new lender, you’ll need to account for the typical mortgage fees, such as legal and valuation costs and the lender’s arrangement fees. Furthermore, your new lender will have to run its usual affordability checks, impacting how much you can borrow and, in some cases, your ability to secure a mortgage.
The Benefits of a Product Transfer
In contrast, the drawbacks that come with a remortgage are the benefits that a product transfer offers.
- No legal or valuation fees: As product transfers are as easy as a click of a button, you’ll not need to pay any legal or valuation fees.
- A simpler affordability assessment: The affordability checks are typically much softer since you already have a mortgage with your current lender. If your financial circumstances have changed, you’ll need to speak with your lender to check your eligibility.
- Security with your lender: If you’re happy with your lender’s terms and criteria, taking a product transfer can be a great way to ensure stability for your property investment.
It’s important to remember that the product transfer rate with your existing lender might not be the most competitive rate available to you in the whole market, which isn’t great if you’d like to save money. That’s why consulting with a mortgage broker is so important.
You’ll also be limited by how much you can borrow and whether or not you can release equity, so it’s essential to explore all your options before making any property investment decisions.
Why use a broker for your product transfer?
Working with a broker means we can check that taking a product transfer is the right option, giving you confidence in your property investment decisions.
We’ll handle the paperwork and any necessary conversations with your lender, ensuring a smooth transition with minimal admin work.
Getting Started
The best course of action for landlords approaching their refinance is to work with a broker (like us!) who can find you the best option on the market to suit your needs.
We can also conduct a Property Portfolio Review to ensure that your portfolio is in order and identify any other areas where you can reduce your mortgage costs.
What next?
To get started, submit an enquiry here or call our team on 0345 345 6788.
