Is your current mortgage deal close to expiring? You might be considering whether to remortgage or use a product transfer. Discover the differences, along with the pros and cons of each option.

A remortgage involves moving to a different lender

In simple terms, a remortgage means taking out a new mortgage with a different lender.

You’d need to go through the same process as you did when taking out your current mortgage. This might involve credit checks and legal work. As a result, this option often takes longer to complete than the alternative and is likely to mean you need to gather more documents.

As well as the length of the process, another drawback with remortgaging is that you might need to pay an arrangement fee.

However, there are benefits that could make remortgaging an attractive option for you.

A key advantage is that you’ll be looking at mortgage options for different lenders, so there will likely be more mortgage deals to choose from. You might also find that a new lender offers an interest rate that’s more competitive than your current provider’s.

A lower interest rate could reduce your monthly repayments and the overall cost of borrowing. As you typically borrow large sums through a mortgage, even a small difference in the interest rate you’re paying could add up to thousands of pounds over the full mortgage term.

Another benefit is that remortgaging gives you a chance to review your borrowing needs. For example, you might want to borrow more against your home to fund a project or reduce your borrowing by using a portion of your savings. Choosing to remortgage could offer you greater flexibility in finding a deal that suits your needs.

A product transfer means you’d remain with your current provider

If you’re happy with the current terms of your mortgage, a product transfer could be simple.

Rather than searching for a new deal, you’d simply switch to a new mortgage with your current lender. As the lender already has your details and can see your repayment history, it’s often a quicker option with less paperwork involved when compared to remortgaging.

A product transfer might also be a valuable option if your circumstances have changed and you’re unsure if it could be more difficult to secure a mortgage. For example, if you’ve become self-employed or have a new job with a lower salary. As you don’t need to go through the full application process, a product transfer could offer reassurance.

The main drawback is that a product transfer limits you to your current lender’s mortgage deals. These might not be as competitive as those offered by other lenders and could lead to your paying more in interest.

If you plan to use a product transfer, it could be valuable to compare different options to ensure it’s the right choice for you. It could save you money now and in the long run if a different lender has a lower interest rate and a deal that suits your needs.

Depending on your circumstances and needs, you might be able to restructure your borrowing through a product transfer. However, this is likely to be less flexible than a remortgage, and it might involve more checks being applied.

We could help you assess your options

As mortgage advisers, we’re here to offer you tailored advice. We could help you assess which mortgage options are right for you and offer guidance throughout the process. Please get in touch if you’d like to arrange a meeting.

Please note:

This article is for general information only and does not constitute advice. The information is aimed at individuals only.

All information is correct at the time of writing and is subject to change in the future.

Your home may be repossessed if you do not keep up repayments on a mortgage or other loans secured on it.