Remortgage vs product transfer: which is better for you?

When you're weighing up remortgage vs product transfer options, it helps to start with the simpler of the two. A product transfer is when you switch to a new mortgage rate with your existing lender, without changing the amount you owe or moving to a new provider. Some lenders call this a rate switch rather than a product transfer, but it's the same thing under a different name.

Product transfers are usually offered a few months before your current deal ends, and some lenders now put together loyalty deals aimed at existing customers that aren't available to new applicants. It's still worth comparing this offer against the wider market rather than accepting it without checking, since a lender's loyalty rate isn't always the most competitive one available.

• You're happy with your current lender and want to avoid a new application
• You want to lock in a new rate quickly, without a full affordability reassessment
• Your circumstances have changed in a way that could make a new lender's application process more difficult

A remortgage means moving your mortgage to a new lender, or arranging additional borrowing with your current lender under a new deal. It's sometimes described as switching mortgage lender, and it gives you access to a wider range of rates than a product transfer, since you're not limited to what your existing lender currently offers.

There are two different reasons people remortgage. Some are simply looking for a better rate than their current lender's product transfer offer. Others want to borrow more, for example to release equity for home improvements, or to change their mortgage term or repayment type. These are different decisions with different risks, so it's worth being clear on which one applies to you before you start comparing deals.

If you're planning to move home around the same time your deal ends, there's also a third option worth asking about: porting your existing mortgage deal to a new property. This isn't quite a remortgage or a product transfer, but many lenders allow it, and it can be worth exploring if you'd rather keep your current rate than start again. Read more in our full guide on what is a remortgage.

• You want access to a wider range of lenders, not just your existing lender's range
• You want to release equity for home improvements, debt consolidation, or a house purchase
• You want to change your mortgage term, repayment type, or add or remove someone from the mortgage

Once you understand the basic definitions, the differences between a product transfer and a remortgage come down to seven practical factors: which lenders you can access, how thorough the checks are, and how long the whole process takes. The tables below set out what to expect from each option.

The clearest way to compare a product transfer against a remortgage is to look at the two things that actually affect what you pay: the rate on offer, and any fees attached to getting it.

If your lender's product transfer rate is only slightly higher than the best remortgage rate you could get elsewhere, and the remortgage comes with an arrangement fee plus legal costs, the product transfer can work out cheaper overall, even at a marginally higher rate. Flip the scenario, and a meaningful rate gap between your lender's offer and the wider market can outweigh a one-off arrangement fee many times over across a 2-year or 5-year fixed term.

The honest answer is that neither option is automatically cheaper. It depends on the size of the rate gap, the fees attached to each deal, and how long you plan to keep the mortgage. Rates and fees also move regularly, so a comparison that was accurate six months ago may no longer hold. Use our remortgage calculator to get a starting point, then ask an advisor to run both options side by side using current rates for your specific balance.

A product transfer isn't just the easier option. In some situations, it's genuinely the better one. These are the most common scenarios where staying with your existing lender makes more sense than a full remortgage. If your credit profile has changed since you took out your mortgage, it's also worth knowing that options like adverse credit mortgages exist if you ever need to look beyond your current lender.

A remortgage takes longer and involves more paperwork, but in the right circumstances it can save you considerably more than staying put. These are the scenarios where it's usually worth the extra effort.

If you're remortgaging to release equity for home improvements, debt consolidation, or another purchase, remember that you're increasing the amount secured against your home. Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it, so it's worth discussing your full financial picture with an advisor before extending your borrowing. If releasing equity through your mortgage isn't the right fit, a secured homeowner loan can be an alternative way to raise funds without disturbing your main mortgage rate, though this also secures the debt against your property.

There's a third path that isn't really a choice at all: doing nothing. If your deal ends and you haven't arranged a product transfer or a remortgage, most lenders will move you automatically onto their Standard Variable Rate (SVR).

SVR payments are typically well above what you'd pay on a fixed or tracked deal, so even a short delay can add noticeably to your monthly outgoings. Rolling onto your lender's Standard Variable Rate can increase your costs significantly, which is why it's worth starting the process 3 to 6 months before your deal ends rather than waiting until it's already expired.

Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it, so if you're struggling to keep up with payments, whether on your current deal or after moving onto your lender's SVR, it's worth speaking to an advisor as early as possible. Independent, government-backed guidance is also available from MoneyHelper on 0800 138 7777.

An advisor's role is to work out which option, a product transfer or a full remortgage, actually suits your circumstances, rather than assuming one is automatically better. That means comparing a wide range of lenders alongside your existing lender's offer, not just looking at one or the other in isolation.

Product transfers can be arranged through an advisor too, not just directly with your lender. This means you can compare both routes in a single conversation instead of researching your lender's offer separately from the wider market. Once you've made a decision, it's worth reading about how to remortgage for a step-by-step look at what happens next.

This guide focuses on residential mortgages. If you're a landlord, buy-to-let product transfers and remortgages follow similar principles, though rental income is assessed differently under separate underwriting standards for buy-to-let lending set out by the Prudential Regulation Authority.

Any advisor arranging your remortgage or product transfer should be authorised and regulated by the Financial Conduct Authority. You can check a firm's status on the Financial Conduct Authority register.