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October 7, 2020
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After your initial mortgage application, remortgaging is one of the biggest financial decisions you can make.
There's the potential to save thousands or borrow thousands more and each of these requires a little work on your behalf – don't worry we'll help you.
The other option (if you don't want to stay on the Standard Varibale Rate ((SVR)) is to remortgage with the same lender. Remortgaging with the same lender probably won't save you as much money, but it can mean less work…
And Mojo can even help you with that.
A product transfer is what banks call it when you remortgage with the same lender.
Remortgaging doesn't always mean swapping mortgage providers, you remortgage whenever you change the deal you're on, switching to a new rate, term, loan amount or other special features.
Mainly because remortgaging with the same lender – doing a product transfer – is easier.
When you switch mortgage lenders, you need to reapply for a mortgage. That means passing eligibility and affordability checks, having your property valued, and getting solicitors involved.
With a Product Transfer, there's none of that.
Your lender simply sends you a range of rates that you can choose to move your existing mortgage debt too. This will happen at the end of your introductory period and just before you fall onto the SVR.
In the main, SVRs are bad. They very rarely work out to be the best mortgage deal you can get. So when your lender emails or writes to you with a range of rates and explains how much money each of them will save compared to the SVR, product transfers look tempting.
Especially as all you need to do to remortgage with the same lender, is agree to the new terms. That's it – no extra checks, no solicitors, and no fees.
The reasons not to remortgage with the same lender boil down to a lack of choice, that could hit you in the pocket.
If you have equity in your home, have kept up with repayments and can afford the new repayments, you should be able to remortgage for home improvements, but let's break it down a bit.
As mentioned, your lender will allow you to switch to only a few new deals. Yes, these will look good compared to the SVR, but there's a good chance that another lender will be able to beat that rate for you.
When you remortgage with a new lender, they will carry out a full valuation on your property – something that is not always the case with a product transfer.
So, if you think the value has increased in the years since you took out your mortgage with your original lender, this may be a better option.
That's because while the property has increased in value, your repayments have lowered your outstanding mortgage loan amount.
By remortgaging with a new lender, you will get your new and true LTV, which is the size of your mortgage as a percentage of property's value.
If your LTV increases, you can get access to better mortgage rates.
When you first apply for a mortgage and you just want to get on the property ladder, most people will admit, paying it off is at the back of their minds.
But once remortgaging comes around, and they've been making repayments for a couple of years, they start to give it more thought.
That may mean simply lowering those monthly repayments, but it may also mean working in a bit of flexibility to overpay whenever you can.
Not all mortgages allow this – without paying fees, anyway – so if you remortgage to a new lender, that is something you can arrange. This won;t always be the case if remortgaging with the same lender.
You stay with the same lender when doing both a product transfer and porting your mortgage, but that's where the similarities end.
You port a mortgage when you move house, and you have to reapply for the same rates.
You do a product transfer when you stay in the same house and don't need to reapply to get new rates.
You can get a full guide on Porting a mortgage here.
Last year Mojo Mortgages became the only broker to show a side-by-side comparison of your product transfer options alongside the best other remortgage rates on the market – from over 90 lenders.
It's clever tech that can save the 1.2 million UK homeowners who remortgage with their existing lender a total of £159 million a year.
We found 93% of people offered a PT could save money by switching to a new lender On average you could save £22 a month that's £528 pound over a new 2-year fixed deal.
But, we’ve seen people save up to £281 a month.
Your Mojo mortgage advisers will be able to talk you through all the remortgage options available to you.
It is very quick. You can do a product transfer with the same lender within 24 hours, so can be a good option if your sole concern is avoiding the higher rates of the SVR.
Here's a few other articles you may find useful.
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Remortgaging with the same lender can be a lot easier. Here we show you how to check you're not missing out an potential savings.