How to compare staying with your existing lender against moving your mortgage elsewhere
When a buy-to-let mortgage deal approaches its end, landlords generally have two routes to consider: choose another product with their existing lender or remortgage to a different lender.
A product transfer can offer a simpler process, while remortgaging creates an opportunity to explore other lenders and borrowing arrangements. The appropriate choice depends on your circumstances, the property, the costs involved and your future plans. For portfolio landlords, different properties may benefit from different approaches.
What is a product transfer?
A product transfer means moving onto another mortgage product with your current lender. For a straightforward rate switch, the borrower, property and underlying borrowing arrangements generally remain the same.
The process often involves less administration than moving lenders. Some lenders offer eligible borrowers a rate switch without fresh credit or affordability checks, provided the application meets their conditions. However, eligibility is lender-specific, and additional borrowing or other changes can require a separate assessment.
A product transfer may still carry a product fee and new early repayment conditions. Convenience should therefore be considered alongside the terms you are accepting.
What does remortgaging involve?
Remortgaging means replacing your existing mortgage with one from another lender, secured against the same property.
A new lender will apply its own criteria, potentially assessing rental income, the property’s value, your circumstances and your wider portfolio. The transaction also normally requires legal work to replace the existing lender’s security.
This route can be useful when another lender offers suitable terms or your requirements have changed. However, the new application needs to be achievable, and any benefit should be assessed after the costs of switching.
When might staying with your lender make sense?
A product transfer deserves consideration where you want to retain the property, keep borrowing at its existing level and avoid unnecessary administration.
It can also be worth exploring if your circumstances have changed since the original mortgage was arranged. A lender offering an eligible rate switch without a fresh affordability assessment may provide an option even where a new application elsewhere would be more complicated.
That does not make acceptance automatic. Payment history, account status and the lender’s current switching rules can affect availability. Discuss any difficulties early so that an adviser can establish what is possible.
When might another lender be worth considering?
Looking elsewhere becomes particularly relevant when your current lender’s products or criteria no longer fit your plans.
You may want to raise money for improvements, change the repayment method or explore terms suited to a different property type. A lender whose approach suits your circumstances may offer possibilities your existing lender cannot accommodate.
Additional borrowing still needs assessing. Property equity alone does not determine what you can borrow: rental affordability, valuation, the purpose of the funds and other criteria can influence the decision.
Your current lender might also offer a further advance, which is additional borrowing alongside the existing mortgage. That is a separate consideration from a straightforward product transfer.
Compare both routes on the same basis
Ask for a comparison covering the same borrowing amount and period, with costs clearly identified. Relevant items include interest, product fees, valuation and legal expenses, adviser charges and any cost of repaying the existing loan.
Check what happens if fees are added to the mortgage. They increase the balance and can attract interest. Also compare the early repayment conditions of each new product against your likely plans.
A marginal rate saving may have little practical value if the switching costs absorb the benefit. Equally, a convenient product transfer may be expensive over the chosen period if another suitable option offers a meaningful overall saving.
Portfolio landlords can use different routes
Consider an illustrative landlord with seven rental properties and two mortgage products ending shortly.
The first property will be retained without further investment. Its existing lender offers a competitive product transfer. The second needs substantial refurbishment, and the landlord wants to explore raising funds.
Those properties present different questions. Staying with the first lender might be appropriate, while the second requires a broader assessment of borrowing options.
Choosing a product transfer for one mortgage does not mean every mortgage should follow the same route. An accurate portfolio schedule helps the adviser understand the combined borrowing, rental income and upcoming decisions.
Check the position across the UK
The distinction between a product transfer and remortgaging applies across England, Scotland, Wales and Northern Ireland. However, lender availability, property requirements and the legal process can differ.
In England, legal work on a remortgage must address the property’s title and the lender’s requirements. Wales has its own occupation contract framework, which should be reflected accurately in the letting information supplied. Scotland has a separate property law and conveyancing system, while Northern Ireland requires attention to its own legal arrangements and the lenders operating there.
Tell your adviser where each property is located and how it is occupied. A lender accepting one property in your portfolio may not accept every other location or letting arrangement.
Start with a conversation about your plans
Contact NetRent around three to six months before your mortgage product ends. Bring details of the existing loan, expiry date, rental income and any plans to sell, improve or expand.
NetRent’s more than 23 years of private rented sector experience helps us understand the practical questions behind your enquiry. We introduce you to our mortgage partner, DNA Financial Solutions, for specialist mortgage advice and arrangements.
We also welcome enquiries about residential and commercial mortgages, finance raising, and mortgages for expatriates and foreign nationals, subject to circumstances and lender criteria.
Before accepting your next mortgage deal, explore both routes. Call NetRent on 01352 721300 or email mortgages@netrent.co.uk.
NetRent does not provide legal advice. This article represents our general understanding of the landlord mortgage market and is provided for information only.