Remortgages and Product Transfers

When your current residential mortgage deal is coming to an end, there are several ways to review and update your borrowing. One option is a product transfer, where you stay with your existing lender but switch onto a new rate from the products they have available. This can be a straightforward route, particularly if you are happy with your current lender and the rates are competitive.

Alternatively, it may be more beneficial to remortgage to a new lender altogether. This can open up a wider choice of products and potentially more favourable terms, depending on your circumstances, credit profile and how the market has moved since you took out your existing mortgage.

At Lewis Christopher we provide remortgage advice in Milton Keynes, Bedfordshire and across Buckinghamshire. This page covers the questions we are asked most often: when you can remortgage, whether a product transfer or a new lender is the better route, what it costs, whether you need a solicitor, and remortgaging to release equity or consolidate debt.

Most lenders let you secure a new deal up to six months before your current one ends. Lenders that have signed the government’s Mortgage Charter, which covers most of the residential mortgage market, have committed to this, and to letting you switch to a better like-for-like deal with them if one becomes available before your new rate starts.

Starting early matters because of what happens if you do nothing. When a fixed or discounted rate ends, most mortgages move onto the lender’s standard variable rate, which is usually well above the rates available on new deals. Switching to a new lender also takes several weeks.

You can remortgage before your deal ends, but if you leave during the fixed or discounted period you will normally pay an early repayment charge. In most cases the right time to act is four to six months before your deal ends, depending on your lender. If you are a Lewis Christopher client, we will be in touch in good time so a new deal is lined up to start when your current one finishes.

We keep a record of when each client’s deal is due to end and get in touch in good time beforehand, usually around four months ahead, depending on when your lender lets you secure a new rate. That gives us time to compare the options before you are moved onto a higher rate.

A product transfer is often the simpler route. Because the lender does not normally have to reassess affordability, it can also suit people whose income or circumstances have changed since they took out the mortgage. However, your current lender’s offer is not always the most competitive, and a new lender may offer a lower rate or incentives that outweigh the extra steps.

If you want to borrow more, or change the term or how you repay, either route will involve a full affordability assessment.

We compare the product transfer your lender is offering against deals from other lenders and show you the difference in cost over the new deal. If staying with your current lender is the better option, we will tell you, and we can arrange the product transfer for you.

Remortgaging to a new lender can involve some or all of the following:

• Product or arrangement fee. Charged by the lender, whether you remortgage to a new lender or take a product transfer with your current one, and ranging from nothing to well over £1,000. Sometimes, mostly on buy-to-let mortgages, the fee is a percentage of the mortgage balance: for example, 1% of a £200,000 mortgage would mean a £2,000 arrangement fee. It can often be added to the loan, but you then pay interest on it for the life of the mortgage.
• Valuation fee. Many lenders offer a free valuation on remortgages.
• Legal fees. Many lenders offer free legal work, using a conveyancer they choose. Some lenders instead offer the chance to use your own solicitor at your own cost, with a cashback paid on completion.
• Exit fee. An administration charge from your current lender for closing the account.
• Early repayment charge. Only if you leave during a fixed or discounted period. It is typically 1% to 5% of the outstanding balance and often reduces each year. Most lenders let you overpay up to 10% of the balance each year without a charge.

A deal with free legal work and no valuation fee is not automatically the cheapest. It is worth comparing the total cost over the deal period, fees included, rather than the headline rate alone. Products that come with an arrangement fee often have a lower interest rate, so we work out the numbers across the different products and go with whichever is the cheapest option overall. Our own fees are set out on our mortgages page.

Only if you are changing lender. A conveyancer acts for the new lender, pays off your existing mortgage and registers the new lender with HM Land Registry. Many lenders include this work free as part of the deal, although you will usually have to use the conveyancer they choose. Some lenders instead let you use your own solicitor at your own cost and pay a cashback on completion.

If you take a product transfer with your current lender, a solicitor is not usually needed.

Remortgaging can also be used to release equity from your property, for example to fund home improvements, consolidate other borrowing or support wider financial plans. Whatever your objective, we’ll help you compare the options, understand the costs and implications, and choose a remortgage or product transfer that makes financial sense for you.

Equity is the difference between your property’s value and what you still owe on the mortgage. Borrowing more against it means a full affordability assessment, whether you move to a new lender or take additional borrowing, known as a further advance, from your current one. The rate you are offered will also depend on how much you borrow compared with your home’s value.

Home improvements are one of the most common reasons to release equity. Lenders will usually ask what the money is for, and it is worth weighing the cost of borrowing over a mortgage term against other ways of paying for the work.

Some people remortgage to consolidate other borrowing, such as credit cards or loans, into one monthly payment. This can reduce the monthly cost, but spreading shorter-term debts over a mortgage term can increase the total amount you repay, and the debts become secured against your home. We will only recommend this where it is in your interests.

If you are remortgaging a rental property, the process is different. Lenders assess buy-to-let borrowing mainly on the rent, and the Mortgage Charter does not apply to buy-to-let mortgages. Our buy-to-let mortgage advice page covers remortgages and product transfers for landlords.

A new mortgage is a good moment to check your protection. If your borrowing or circumstances have changed, it is worth reviewing your life insurance and income protection so that the mortgage would still be covered if you could not work or the worst happened.