29 Jun When is a mortgage product transfer a good idea?
We like our readers to be well informed. Many people contact us asking about remortgaging and other tactics to help their affordability, but remortgaging isn’t always the answer. More and more lenders are encouraging borrowers to remortgage early by waiving penalty fees.
You might even be one of those people who has received a letter from your mortgage lender offering you the chance to remortgage up to six months early with no penalty charges?
Recently, one lender has been sending out letters to their mortgage customers encouraging them to sign up for a new deal in order to cut their repayments – but why, we hear you ask!
So what’s in it for the lender?
If you move to a new mortgage with your current lender without borrowing any extra money or changing any of the details of your existing deal it is referred to as a ‘product transfer’.
Unlike a new mortgage application these product transfers do not have to be reported to the Bank of England or the Financial Conduct Authority (FCA), and that’s good news for the lender.
As ‘product transfers’ don’t qualify as new lending, banks and building societies are not required to check that you have received financial advice before taking out the mortgage. Instead it can be done quickly, which saves them time and money.
Who would it benefit?
You may remember we spoke about ‘mortgage prisoners’. These people are those who are trapped on a higher mortgage and are unable to remortgage due to their earnings. They are often prevented from remortgaging to cheaper deals due to affordability rules which insist that people can’t afford to pay less than they currently are.
If this applies to you then transferring your mortgage product could be the answer.
There is no need for the usual remortgage checks and the affordability rules don’t apply – you could save yourself thousands of pounds in the long run.
It’s not the perfect solution by any means as by transferring your product with your existing lender means you aren’t able to compare deals from across the market. However, should you find yourself in the position of being trapped with your current lender it is certainly a means to save on your payments.
As always we recommend you do your research, but if you would like to speak to someone about your situation give us a call on 01753 439000 or email us. You can also follow us on Facebook, Twitter and LinkedIn.