Product transfer or remortgage: how to compare your options

A product transfer means taking a new mortgage deal with your existing lender. A remortgage means replacing your mortgage with one from another lender. Either could suit you, depending on the products available, whether you qualify and the cost of making the change.

The useful comparison goes beyond the interest rate. Fees, the balance you’ll owe afterwards, changes to your circumstances and the flexibility you need can all affect the choice. A quicker process doesn’t necessarily mean a cheaper mortgage, and a lower rate doesn’t automatically justify switching lender.

What’s the difference between a product transfer and a remortgage?

With a product transfer, you stay with your lender and move onto another of its products. A straightforward transfer changes the deal without including a separate application for extra borrowing.

With a remortgage, the new lender’s mortgage repays your existing one. You remain in the same property, but make future payments to the new lender.

The word “remortgage” is sometimes used more broadly. Understanding how remortgaging works helps you separate a new-lender application from changing products with your current lender.

What should you compare before choosing either route?

Start with your current lender’s actual offer, rather than assuming loyalty brings a better rate. Then compare suitable alternatives available to you.

Factor	Staying with your lender	Moving to another lender
Available products	Its existing-customer offers	Suitable products from other lenders
Eligibility	Requirements for the specific switch	Current borrower and property criteria
Income or credit changes	Whether fresh checks are needed	Assessment route and evidence required
Costs	Product/advice fees and applicable charges	Product/advice fees, exit charges and uncovered legal/valuation costs
Borrowing or term changes	What needs separate approval	Whether the requested structure meets criteria
Property value and LTV	Value and balance used for pricing	Value and balance used for pricing
Future plans	New product’s features and restrictions	Overpayments, early-exit terms and moving-home requirements
Timing	When the new deal takes effect	Application and legal completion dependencies

Staying with the same lender doesn’t mean every mortgage feature stays the same. Equally, another lender’s advertised rate isn’t necessarily available to you. Loan-to-value, or LTV, compares your borrowing with the property’s value, but a lower LTV doesn’t guarantee a particular rate.

How do you compare the cost fairly?

Use the same starting balance, remaining repayment term, repayment type and start date. Compare over a consistent period, such as two equivalent two-year fixes.

Comparing a two-year fix with a five-year deal needs more care. You can’t assume what rate will apply after the shorter deal ends. Variable-rate comparisons also need explicit assumptions about future rates.

Separate three questions:

• What will I pay each month? This shows the immediate effect on your budget.
• How much cash will I pay during the period? Include repayments, upfront fees and relevant charges, less cashback actually received.
• What will the borrowing cost, and how much debt will remain? Compare interest and fees alongside the closing mortgage balance.

Monthly repayments include capital as well as interest. Adding repayments and fees together doesn’t, by itself, establish the full borrowing cost.

For equal starting balances with no extra borrowing, you can cross-check the period’s cost by adding payments, cash-paid costs and the closing balance, then subtracting the starting balance and cashback. This accounts for differences in how much capital you’ve repaid.

Include any early repayment charge (ERC), exit fee, product fee, broker fee and legal or valuation costs you must pay. A fee-assisted package may have exclusions. If you expect to leave the new deal early, include any charge for that exit too.

For a fuller breakdown of what you might pay and when, see our guide to remortgage costs and fees.

If a fee is added to the mortgage, model it in the borrowing and repayments rather than counting it again as an upfront payment. Adding it to the loan can also mean paying interest on it: Halifax’s switching guidance gives a public example of this distinction.

A lower rate can save less than you expect

Suppose you’re comparing two hypothetical deals on a £200,000 capital-and-interest repayment mortgage with 25 years remaining. Both are fixed for two years. The product-transfer example has a higher rate but no product fee; the remortgage example has a lower rate and a £999 fee paid upfront.

Comparison	Illustrative product transfer	Illustrative remortgage
Interest rate	4.50%	4.10%
Upfront product fee	£0	£999
Monthly repayment	£1,111.66	£1,066.75
Payments over 24 months	£26,679.96	£25,601.95
Payments plus product fee	£26,679.96	£26,600.95
Balance after 24 months	£190,935.22	£190,427.26
Interest plus product fee over 24 months	£17,615.18	£17,028.22

The remortgage requires about £79 less cash over two years and leaves about £508 less debt. Its interest-plus-fee cost is approximately £587 lower before other switching costs. Additional charges could reverse that result.

These aren’t live product quotes. The calculation assumes monthly interest at the annual rate divided by 12, no overpayments and no other charges or incentives. It uses unrounded payments internally, with results displayed to the nearest penny. Lenders’ daily-interest calculations and payment rounding may differ.

A smaller balance can change the outcome

Keep the same rates, fee and assumptions, but reduce the balance to £70,000. Over two years, interest plus the product fee is approximately £6,165 for the transfer and £6,609 for the remortgage.

The fee-free transfer now costs about £444 less, despite its higher rate. This shows why the amount you owe matters; it doesn’t establish that either route is generally cheaper.

You can use our mortgage comparison calculator to compare payments and product fees. It doesn’t account for every switching cost or differences in remaining debt, so add those checks separately.

How could changed circumstances affect your options?

A straightforward product transfer may involve fewer checks than moving lender. The FCA’s consumer guidance explains that borrowers up to date with payments should generally be able to switch deals with their current lender without another affordability check if they aren’t borrowing more, although exceptions apply.

That isn’t a guarantee of acceptance or a promise that every lender avoids credit searches. An affordability assessment and a credit check aren’t the same thing.

A new lender usually assesses your finances and property. However, the FCA’s mortgage rule changes allow flexibility for some remortgages, including an optional modified affordability assessment.

That route has conditions, including the same property, no extra borrowing apart from permitted fees, no mortgage payment shortfall now or in the previous 12 months, and a qualifying more-affordable mortgage. Lenders choose whether to use it, and their wider acceptance criteria still matter.

Suppose you’ve recently become self-employed and want no extra borrowing. We’d establish what your current lender offers, then investigate realistic alternatives. Recent self-employment doesn’t automatically prevent remortgaging or make staying the best choice.

One of the first things we’d check is whether you only want a new rate or need to change the borrowing as well. New debts, reduced income or changes to your credit history can affect which options are practical.

If your credit history has worsened, remortgaging after credit problems can involve different checks from taking another deal with your existing lender.

If you’re worried about meeting the payments, contact your lender early rather than relying on a new deal to resolve the difficulty.

What if you want to borrow more or change the mortgage?

Changing lender isn’t necessarily required to borrow more. Your current lender may offer a further advance, subject to an application and its criteria. This is separate from a straightforward product transfer.

For example, someone seeking £20,000 for home improvements might compare keeping their existing borrowing and adding a further advance against replacing the whole mortgage with a larger loan elsewhere.

We’d compare the combined cost of the existing mortgage and extra borrowing, rather than looking only at the rate on the additional amount. The two parts may have different rates, terms or deal-end dates.

Changing the term, repayment type or borrowers can also alter the assessment. Don’t assume these changes follow the same process as selecting a new rate online. Removing a borrower or changing ownership may involve legal work as well as lender approval.

Extending the term can reduce monthly payments while increasing lifetime interest. We’d first compare the options using the same remaining term, then consider separately whether a different term suits your needs.

Property value matters too. Ask which value each lender uses for LTV and pricing; your own estimate doesn’t bind either lender. Property issues or restrictions attached to an equity-loan scheme may need specialist checks.

Which route might suit different situations?

The following are hypothetical situations, not recommendations for particular borrowers.

A smaller balance with no other changes

Someone who only needs a new rate may find that product and switching fees outweigh the saving from another lender’s lower rate. The current lender’s fee-free option deserves a fair comparison.

A larger balance with a suitable competing offer

On a larger mortgage, a modest rate difference can have more effect. Moving lender may be worthwhile if the borrower qualifies and the saving remains after fees and charges. Eligibility and suitability still come before the headline rate.

A possible move or substantial overpayment

Someone expecting to move or repay a lump sum may place more value on flexibility. Check overpayment allowances and ERC terms for both products.

A portable mortgage isn’t an unconditional promise that you can take it to any new home. Lender requirements apply when you move, including checks relevant to the property and borrowing.

Staying doesn’t necessarily preserve valuable old features. Nationwide’s public switching guide explains that some existing features can be lost permanently when customers change products. That’s a lender-specific example, but a useful reason to check your documents.

Your preference between fixed and tracker mortgages is a separate decision from whether to stay with your lender. Compare the products’ actual terms rather than treating the route as a guarantee of flexibility.

What should you have ready to compare your options?

Before comparing your options, gather:

• Your outstanding balance, remaining term and repayment type.
• The deal-end date and confirmed ERC schedule.
• Your current lender’s offer, including fees and product conditions.
• An estimate of your property’s value.
• Changes to income, debts, spending or credit history.
• Any extra borrowing or changes to the mortgage you want.
• Plans to move, overpay or repay a lump sum.

The point at which you can arrange your next mortgage deal depends on lender rules and the route you’re considering. Arranging it ahead of time and starting it early are different decisions.

We’d want to see your current lender’s actual offer before deciding whether another lender provides a worthwhile alternative. Where costs are close, future plans and product restrictions can be particularly important.

Our remortgage advice can help you compare suitable products, costs and lender requirements against your current mortgage and plans.