When a mortgage deal approaches its end, remaining with the existing lender can seem like the easiest option.
A product transfer may involve less paperwork, no new legal work and, in some cases, no fresh valuation or detailed affordability assessment. However, convenience does not automatically make it the most suitable or cost-effective choice.
Remortgaging to another lender may provide access to a wider range of rates, fees and product features. It may also involve more checks, additional costs and a longer application process.
Landlords and homeowners should therefore compare both routes before making a decision.
What is a product transfer?
A product transfer means selecting a new mortgage product from your existing lender while keeping the borrowing with that lender.
If you are not changing the mortgage balance, term or repayment method, the process may be relatively straightforward. Depending on the lender and circumstances, a product transfer may offer:
- A quicker application process.
- Limited documentation.
- No new legal work.
- No external property valuation.
- No need to move the mortgage account.
- Fewer affordability or underwriting checks.
- Lower switching costs.
This can make a product transfer particularly useful where circumstances have changed since the original mortgage was arranged.
For example, a borrower may now be self-employed, have lower personal income, have recently changed jobs or have experienced credit problems. A landlord’s property might also fail the rental stress test required by a new lender.
The existing lender may still permit a straightforward switch to another product, although its own terms and eligibility requirements will apply.
What is a remortgage?
A remortgage replaces the existing mortgage with a new loan from a different lender.
The new lender will normally conduct a complete assessment of the borrower and property. This may include:
- Credit checks.
- Income or rental-income assessment.
- Affordability calculations.
- A property valuation.
- Legal work.
- Examination of the mortgage repayment history.
- Checks on the property type and condition.
- Portfolio assessment for some landlords.
Although this requires more work, it opens the door to products available across the wider mortgage market rather than only those offered by the current lender.
A different lender may offer a more competitive rate, a lower product fee, more suitable early repayment terms or criteria that better match the borrower’s plans.
Do not compare interest rates alone
The lowest advertised rate is not necessarily the least expensive option.
A product with a lower rate may carry a substantial arrangement fee. That fee may be paid immediately or added to the mortgage, where it will normally attract interest.
The complete comparison should include:
- Monthly mortgage payments.
- Product or arrangement fees.
- Valuation costs.
- Legal and administration fees.
- Cashback or fee-assisted incentives.
- Early repayment charges.
- The length of the new deal.
- Interest payable during the initial period.
- The balance likely to remain when the deal ends.
Consider the cost over the period for which you expect to keep the mortgage, rather than focusing solely on the initial monthly payment.
A fee-free product transfer could cost less overall than a remortgage with a marginally lower rate and a large fee. Equally, a remortgage could produce meaningful savings where the rate difference is sufficient.
The valuation could change the result
The property’s current value affects its loan-to-value ratio, commonly known as LTV.
If the property has increased in value or the mortgage balance has fallen, the borrower may qualify for a lower LTV band and potentially more competitive products.
However, the existing lender might use an automated or indexed valuation that does not fully reflect improvements or local market changes. A new lender may instruct a different valuation and reach another figure.
For landlords, the new lender may also assess the current market rent. This can help where rents have increased, but it can create a problem if the valuer adopts a lower figure than expected.
Before relying on a particular LTV or rental calculation, establish how the lender is likely to value the property.
Landlords face additional considerations
A landlord remortgaging to a new lender may need to satisfy current rental stress tests, property criteria and portfolio requirements.
The lender may consider:
- The confirmed market rent.
- The required Interest Coverage Ratio.
- The stress rate applied to the loan.
- The landlord’s tax position.
- Whether the property is owned personally or through a company.
- The type of tenancy.
- The condition and construction of the property.
- The performance of the wider portfolio.
- The landlord’s experience and financial resilience.
A landlord who cannot obtain the required borrowing from a new lender may still be offered a product transfer by the existing lender. However, remaining with the current lender could also mean missing a product better suited to the portfolio’s long-term plans.
The availability of a simple product transfer should not prevent the landlord from checking the wider market.
What if you want to borrow more?
A straightforward product transfer generally covers the existing mortgage balance. Additional borrowing may require a separate application and affordability assessment.
The existing lender might offer a further advance, potentially on a different rate and with a different end date from the main mortgage.
Alternatively, a remortgage could combine the existing balance and additional borrowing into one new loan. This might create a more straightforward arrangement, but the complete cost and any early repayment charges must be considered.
Landlords raising capital for another purchase should also examine whether the increased borrowing remains commercially sensible after fees, interest and rental stress testing.
Borrowing against property increases financial exposure and should be based on a clear purpose and affordable repayment strategy.
Timing matters
Mortgage options should ideally be reviewed several months before the existing deal ends.
Starting early provides time to:
- Obtain the current mortgage balance and deal-end date.
- Check any early repayment charge.
- Review the existing lender’s product-transfer options.
- Compare suitable products from other lenders.
- Assess the property’s likely value and rental income.
- Prepare accounts, tax documents and portfolio information.
- Complete a remortgage before moving onto the lender’s standard variable rate.
Some lenders allow borrowers to secure a new product in advance. Depending on the lender’s rules, it may also be possible to review that choice if rates change before completion.
Do not assume that reserving a product removes every option. Equally, check carefully before cancelling a reserved deal, because it may no longer be available later.
Which route deserves a closer look?
Both routes do.
A product transfer may be particularly attractive where simplicity, speed and reduced underwriting are important. A remortgage may deserve closer attention where wider product choice, lower overall costs, different lending criteria or additional borrowing could provide a meaningful advantage.
The right decision depends on the complete figures and the borrower’s future plans—not simply which route involves the least paperwork.
Compare your options with NetRent
NetRent Mortgage Solutions works with DNA Financial Solutions to provide access to independent mortgage and finance advice for landlords and homeowners.
Before accepting a product transfer, let us compare it with the wider mortgage market. An early review can help identify the available routes, calculate the complete cost and reduce the risk of moving onto a more expensive standard variable rate.
Call 01352 721300 or email mortgages@netrent.co.uk three to six months before your current mortgage deal ends.
NetRent does not provide legal advice. This article represents our general understanding of the landlord mortgage and rental property market and is provided for information only.
Mortgage products, interest rates, fees and lender criteria can change. Individual circumstances vary, and appropriate mortgage, financial, legal and tax advice should be obtained before making a decision.
Your home or property may be repossessed if you do not keep up repayments on your mortgage.