How Do Mortgage Product Transfers Work?
The process is usually simple. If you are on a standard variable rate and have seen the interest rates rise, you might want to move onto a fixed-rate basis.
If the mortgage value is the same, and you're happy to stay with your lender, this is a straight product transfer where you keep the same lender, but choose a different product.
What is the Process for Transferring Mortgage Products?
Typically, the process is quick and easy since you don't need a property valuation or to go through any new eligibility inspections - other than making sure you can keep up with the new repayment values.
Most lenders will negotiate a product transfer over the phone, and then run the affordability checks. Your provider will ask you to sign a product transfer document and might run a credit check before formalising the switch.
In some cases, your income is re-evaluated, but this isn't always the case.
What Fees Are Payable on a Mortgage Product Transfer?
Transfer fees depend on the lender, but it is usually cheaper than a remortgage or taking out a new mortgage product.
Many borrowers choose a transfer to avoid losing competitive rates. However, if you can find cheaper interest rates with another lender, a remortgage might be the better choice.
A remortgage can take longer, be more expensive, and have more stages involved so it is essential to compare costs such as exit fees with the amount you'd be saving.
How are Product Transfers Different from Remortgaging?
Product transfers mean switching from one mortgage product to a different one, both with the same lender.
If you wanted to increase your borrowing and stick with the same lender, this is called a further advance. Changing to a new lender would be a remortgage.
Further advances are called a non-standard product transfer, and the same applies to any other changes such as extending the mortgage term. In this case, the process is longer and usually requires a new valuation as well as credit checks and affordability tests.
What are the Benefits to Mortgage Product Transfers over Remortgaging?
Remortgaging takes longer, costs more, and is more complicated.
Benefits of choosing a mortgage product transfer include:
- Avoiding a full property valuation.
- Not having to use solicitors or pay legal fees.
- Lower costs overall due to the simplicity of the switch.
- Less paperwork and a faster process.
What are the Disadvantages of a Product Transfer Rather Than a Remortgage?
The main issue with product transfers is that you might miss out on a much better deal by not considering what another lender could offer.
Remortgages might mean saving a great deal of money, rather than restricting yourself to only the products on offer from your current provider.
If you are thinking about a product transfer, you must seek expert advice from an independent broker - you need a clear idea about the best options, and where you will save the most money.
What Criteria Impact a Non-Standard Mortgage Product Transfer?
Regular product transfers do not involve a lot of checks. Non-standard transfers are a little different.
Should you wish to increase your borrowing, or to make a significant change to the mortgage, your lender might go back to the drawing board in terms of valuations and assessments.
How Does My Age Impact Non-Standard Product Transfers?
If you are older and looking for a non-standard transfer, fewer lenders will be able to offer approval.
Some lenders cap the age they will lend to - either at the time of the application or when the term is due to end. Other lenders will not consider retired applicants at all.
However, there are specialist lenders who have no maximum age limits, and regularly lend to retired people, and so contacting the Revolution team is the best course of action.
Equity Release as an Alternative Option
Equity release is another option for people aged over 55. This means releasing equity, without needing to move, and raising capital for any purpose without any monthly repayments.
Lenders will consider how much your property is worth, and how much equity you hold, your age, and whether you have any severe health conditions.
The capital borrowed plus the interest becomes payable on the event of your death or another agreed event. Hence, life expectancy is an essential factor in the decision-making process.
Can I Get a Non-Standard Product Transfer on a BTL Property?
You can change mortgage terms on a buy to let mortgage, but the process is a little different.
Fewer providers will offer mortgage product transfers on a BTL mortgage, and the requirements around the below factors can be stricter:
- Property Loan to Value ratio
- Your income
- Projected rental income
- Comparison of rent vs mortgage payments
If you are looking to transfer your buy to let mortgage products, give the Revolution Brokers team a call on 0330 304 3040.
What Deposit is Needed for a Non-Standard Product Transfer?
Usually, you won't need to pay any additional deposit to transfer your mortgage product.
However, if you are remortgaging the standard minimums are:
- 5% on residential properties
- 15% on buy to let properties
- 25% for bridging loans
If your transfer is higher risk or non-standard, you might be asked to pay a higher deposit.
Deposit Source Options
Where your deposit comes from does matter - because some deposit sources are considered higher risk.
Low-risk deposit sources include:
- Personal savings.
- Profits from another property sale.
- Gifts from close family.
- Cash raised from recorded asset sales.
Higher risk deposit sources include:
- Gifts from distant relatives.
- Gambling proceeds.
- Overseas savings.
Deposit sources that are rarely accepted by high street lenders include:
- Gifts from friends or employers.
- Personal loans.
- Cash.
How is Affordability Calculated on Non-Standard Mortgage Transfers?
All mortgage lenders need to assess your disposable income, and whether you can afford to keep up with the mortgage repayments.
This process applies if you are transferring products, but wish to extend your mortgage value. You will also need to pass through affordability assessments if you decide to remortgage.
If you earn a higher income and have a minimal debt vs income ratio, the more a lender can offer. There are, however, caps that dictate the maximum you can borrow.
Generally, caps are set at three to four times your income (joint, if applying as a couple). Other lenders can lend up to five times your income, with some offering as high as six times, depending on the scenario.
You can also consider secured loans as an equity release option since this alternative form of lending is often available up to ten times your annual income.
Is Employment Important in Non-Standard Product Transfers?
Yes, your employment status will be considered - if you have full-time, permanent employment, it is easier to calculate your income, and there is less risk than if you are self-employed.
If you are employed, a lender will consider:
- Whether the role is full time or part-time.
- What sort of contract you are on.
- How long you have held your post.
- Whether your income includes bonuses and commissions - some lenders will disregard this variable income in their lending calculations.
If you are self-employed, lenders will usually ask for three years of trading accounts to prove a stable income - although specialists can lend to applicants with one year of trading history or even less.
Can I Get a Mortgage Product Transfer with Bad Credit?
Whether your lender will approve a product transfer with a bad credit history depends on their policies.
This varies depending on how severe the credit issues were, and when they happened.
If you have been rejected for a mortgage transfer based on credit scoring, you can consider a bad credit lender who may be able to offer a more favourable rate on a remortgage.
How do Help to Buy Product Transfers Work?
You could apply for a product transfer if you purchased your home with Help to Buy.
Some homeowners use a Help to Buy remortgage, which can be a simple product transfer with their current lender, or a completely new deal. These work similarly to any other transfer and do not impact the equity loan in place.
Expert UK Support with Mortgage Product Transfers
Revolution Brokers team are product transfer experts and can ensure you understand all the pros and cons before you make a decision.
Here are some indicative details about the transfer policies of some of the largest UK lenders:
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Lender
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Product Transfer Policy
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Accord
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Can transfer when a fixed-rate deal ends.
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Aldermore
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Offer transfers without new affordability or income checks.
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Barclays
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Offer reasonable transfer rates for existing customers.
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Birmingham Midshires
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Free product transfers.
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Halifax
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Offer transfers at any stage of your mortgage, even during your current deal.
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NatWest
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Provide an in-house transfer advisory service.
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Nationwide
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Suggest using a broker or their in-house transfer advice service.
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Santander
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Offer transfers within four months of your current deal ending.
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TSB Lloyds
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Transfers are available, but there is no online service.
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Yorkshire Building Society
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Offer the option to reverse a new deal within 120 days.
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For more information and advice about mortgage product transfers, contact Revolution on 0330 304 3040 or drop us a message at [email protected].
