Product Transfer
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What is a product transfer?
When you first come to us for a mortgage, we will recommend a deal which might last two, three, five, seven, or 10 years. You then choose your mortgage period and when it ends, you would then go onto the lender’s Standard Variable Rate. You need to avoid that, so that you don’t pay extra money. It’s like a mobile phone contract – you need to renegotiate to get a better deal.
Product Transfer
What’s the difference between a remortgage and a product transfer?
Remortgaging is moving to a new lender. With a product transfer you stay with your current lender and choose a new product. We recommend a product after doing some research into your specific situation.
Is it better to stay with your current lender?
That’s the million dollar question and the answer is, it’s complicated. But, we have a prescribed way to decide what’s best. We start by contacting you 6 months before the end of your deal to see if your circumstances have changed.
We always compare what you can get elsewhere to what your lender will offer. We’ll see what’s cheaper and look at the cost of moving on every deal expiry. That way, if it’s cheaper to move lenders you will be certain you’re getting the best deal. It gives you peace of mind.
Can I get a product transfer early?
Yes, and it’s something people have wanted to explore a lot. We’re recording this in May 2023 and last year the mini budget made rates go all over the place. A lot of people wanted to fix their rates then, and it’s still the same now.
If you’re worried about your rate increasing, most lenders will let us reserve the rate now and have the new product start after your current product expires. We can reserve rates now to go live in December.
In January this year, we fixed a lot of products for clients, but rates were quite high. Ever since then, we have reviewed them periodically to see if there’s a lower rate. If there is, we’ll recommend that new lower rate. So we take all that hassle away – we’re chasing live rates up until the date your product renews.
You could leave a deal early, rather than wait for your product to expire, but it doesn’t often make sense to pay an early repayment charge. We would advise you on this based on your specific situation.
When should I do a product transfer?
I would encourage you to contact your broker about six months before renewal – then we can start the process. We will reserve something now so you’re not caught out by any rate rises. We can also set up a remortgage if there’s a significant saving, as remortgage offers typically last 6 months. Seek that advice as early as possible to get the best options for you.
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It doesn’t cost anything for a chat, it’s free and we never charge a fee until we’ve got a mortgage offer. So pick up the phone and let us take it from there.
How long does a Product Transfer take?
They don’t take long. The key bit is doing the research to collect numbers and cost savings to make sure you understand how much you could save.
If you stay with a lender it’s much quicker – there’s no underwriting, legals or valuations involved so it doesn’t take long.
How much does a product transfer cost?
Currently, we don’t charge for a product transfer – all our advice and research doesn’t cost you anything. We get commission from the lender. When you’ve set up a mortgage with us you’ve already paid us, so we want to make sure you’re still getting a good deal.
The market is unprecedented. We have some clients whose deal is ending in June 2023 where the rates have changed about six times in the past few months. We have moved their best deal from a tracker to a lower fixed rate, then back to a tracker and now they’re on the best rate so far.
In that scenario, we might discuss a charge, but generally we don’t charge.
Do you need a credit check for a product transfer?
Some lenders do additional checks when they do product transfers. It also depends if you’re looking to make any changes to your mortgage. Are you looking to extend the term or the method of repayment?
Believe it or not, you can do that on a product transfer. You can select a new product and make changes to the deal you are on with your existing lender. We’ll ask you all those questions as part of the process.
If you’re doing that sort of thing then yes, they do additional checks, but normally if we’re arranging a new product, lenders won’t. It’s always best to ask us.
We did have one instance where a product transfer was declined because there was a fraud marker on someone’s credit report – but that was very unusual.
Can you cancel a product transfer?
Yes – as I mentioned we’ve cancelled six product transfers for one client to make sure they were on the best deal. So yes, you can.
If there are rate reductions we keep an eye on it and make a recommendation based on that. You can cancel a product transfer up until just before it goes live.
Some lenders have a minimum cancellation term, and with others you have to apply by a certain date for the new product to go live the next month. We’ll let you know if there are any deadlines or restrictions.
Is there anything else you’d like to add on product transfers?
Our job is to review everything with you – is there anything that’s happened since we first took out the mortgage? Do you need to make any changes, to borrow any additional money for example? Do you need to pay some of the mortgage down with your savings, and if so when is the best time to do that?
Those answers then drive the products that we recommend. It’s a bit like getting mortgage advice again, to make sure that you’re on the best deal.
To highlight an example – this is a Google Review from a client about a challenging situation:
“You are the most honest people and advisors. I want to tell everyone to use them. They’re the best.
Here’s my story.
My rate was up for renewal. I was informed by Lucica which was the best rate to go for. Then they called me to say that the bank was putting the rate up the next day – they tried to secure it for me but their system to the bank got blocked.
They called me and said they didn’t want me to miss the rate so talked me through how to get it directly. So grateful to these guys, who saved me money by giving me correct, honest advice and getting me the low rate. They weren’t charging me and offered to track and review my rate up until it starts. If the rate drops further then they will change. Thanks for the honesty. You’ll be recommended to everyone I know.”
That really makes me proud of my team. It doesn’t cost anything to do the right thing. We’ve just saved someone the value of a cinema ticket a week – and that makes a difference. It’s testament to our morals and ethics. That review really made my day.
Think carefully before securing other debts against your home.
You may have to pay an early repayment charge to your existing lender if you remortgage.
Your home may be repossessed if you do not keep up with your mortgage repayments.
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