As a mortgage advisor, I can speak with some authority when I say that as advisors one of our fatal flaws is that we can, on occasion, tend to far too much jargon!
And the end result is often complete and utter bewilderment of the very people we are supposed to help! Which brings me to the purpose of this article…
“Daniel, What is the difference between a remortgage and a product transfer? And which one is best for me??”
It’s a great question and one that far too many mortgage advisors simply gloss over! Leaving their clients confused about something that is actually fairly simple!
So first off let us start with remortgaging, more specifically; what a remortgage actually is at it’s heart.
At it’s core, behind all the jargon and nonsense terms, a remortgage is simply the process in which you pay off your existing mortgage and then start another mortgage in it’s place.
Usually the new mortgage has different, better, terms than the first mortgage. (Such as a better interest rate)
Though sometimes people will remortgage for other reasons than simply to secure a better deal. For example, some people wish to remortgage in order to take additional funds out for things like home improvements.
So I want to preface this section by saying that determining whether a remortgage is right for you is a complex question and there can be lots of variables in play. So if you are considering a remortgage for whatever reason, it’s best to speak to an advisor about it.
Generally, a remortgage is suitable, as mentioned above, if you’re wanting to secure better terms than your existing deal.
But the big difference with product transfers is that a remortgage not only allows you to secure better terms, it also allows you to change other things about the mortgage.
Such as the amount you borrowed or even the length of time you have on the mortgage (the mortgage term). This makes remortgaging a great idea for things like taking out money for home improvements or for things such as consolidating debt. All while avoiding taking out a second mortgage which can often involve more costs than simply remortgaging.
I’m glad you asked!
Well a product transfer can often look like a remortgage (and in fact you’ll likely consider them both at the same time in your mortgage journey) but the important difference is that Product Transfers don’t involve a new loan.
A product transfer is when you keep your existing loan and stay with your existing lender but with a new “deal” or product.
So a product transfer can get you a new interest rate (and potentially some sweet lower monthly payments!) but it can’t change the amount you borrowed or how long you borrowed it for or anything else.
It’s very simply changing from one “deal” to a new, usually better, one… Same mortgage, same details but a different deal.
So once again I want to quickly preface this section with a little disclaimer; determining if a product transfer or a remortgage really is a very complex process more often than not that can appear deceptively simple… So if you ever are considering either, speak to a professional advisor!
So this is the big question! The answer to which depends a lot on your circumstances and also on your needs.
There are some things you can’t do with a product transfer, such as borrow more money from your lender or move to another house.
Equally a remortgage can often involve fees and costs that a product transfer doesn’t. These fee’s can also include early repayment charges (ERC’s) if your existing mortgage includes these and you are liable for them.
This is where the advice of a professional mortgage advisor can save you time, hassle and crucially (because we’re Scottish!) money as well!
A professional advisor will be able to compare, on your behalf, options for remortgaging and for product transfers, tailored to your exact situation and circumstances, and present you with advice as to which will best meet your needs!
As mentioned, product transfers and remortgages can often appear deceptively simple but with proper advice they can each be a great tool for you to make changes to your existing mortgage if you are coming to the end of your current fixed rate deal!
Like a screwdriver and a hammer, neither is better or worse! They are both simply tools at your disposal, depending on your needs at the time, to make changes to your current arrangement.
Whether you wish to get a better deal while staying where you are or if you wish to borrow more and move somewhere bigger! You’ll likely need both at different points during the lifetime of your mortgage.
If you have any questions about Product Transfers or are thinking of remortgaging and would like to discuss your situation with a qualified mortgage advisor, completely no obligations, then please be sure to enter your contact details in the form below to reach out to us!
