Product Transfer or Remortgage?

Why Loyalty Probably Costs You Money

If your current fixed rate is approaching its end date, you have probably already received a perfectly polite letter from your existing lender presenting you with their range of new deals and gently encouraging you to switch onto one of them. It is convenient, it requires almost no paperwork, and it feels like the easy option, which is precisely why so many borrowers take it without checking what else is out there. UK Finance is forecasting that product transfers will grow by 13% in 2026, and whilst sometimes a product transfer is genuinely the right choice, more often than not it quietly costs people money they did not need to spend.

What Each Option Actually Means

A product transfer is when you stay with your existing lender and simply move onto one of their new mortgage deals, usually with no affordability check, no valuation and minimal paperwork. A remortgage is when you move your mortgage to a different lender entirely, which involves a fresh application, an affordability assessment, a valuation and slightly more administrative effort all round.

On the surface a product transfer sounds easier and therefore better, and lenders absolutely market it that way, but the question is not which one is easier, the question is which one leaves you better off financially over the next two to five years. Those are very different questions.

Why Your Existing Lender Is Almost Never Offering Their Best Rate

Lenders generally offer their sharpest rates to win new business, not to retain existing customers, because the customer they already have is, by definition, less likely to leave. Your retention offer is calibrated to be just attractive enough to keep you from looking elsewhere, which is not the same as being the best deal you could get if you actually did look elsewhere.

On a £200,000 mortgage, even a 0.3% difference in your rate over a five year fix works out to several thousand pounds across the term, and lenders know this. They are betting on the inconvenience of switching being worth more to you than that money, and quite often they are right, which is exactly why it is worth checking properly rather than assuming.

When a Product Transfer Genuinely Is the Right Answer

That said, a product transfer is not always the wrong choice, and there are several situations where it genuinely is the better route. If your circumstances have changed in a way that would make passing a fresh affordability assessment difficult, including a recent job change, a drop in income, becoming self employed or taking on additional debt, your existing lender may offer better access than the wider market.

If your property has fallen in value and your current loan to value would be problematic on a remortgage, staying put can preserve a better rate than starting fresh elsewhere. If the difference in pricing between your retention offer and the best market deal is genuinely small, the lower fees and simpler process can tip the balance in favour of staying. None of these are signs that loyalty pays, they are signs that the right answer depends on your actual situation rather than what the lender wants you to do.

 

The Bit That Catches Most People Out

If you do nothing when your fixed rate ends, you do not stay on your current rate, you roll onto your lender's standard variable rate, which can be approaching ten percent in some cases. That is not a typo, that is genuinely the cost of inaction in the current market, and it can add hundreds of pounds to your monthly payment overnight.

This is why you should be looking at your options at least six months before your current deal ends, because both product transfers and remortgages can typically be agreed in advance and locked in before your existing rate expires, which means you can keep your options under review without panic.

How to Actually Compare Properly

A proper comparison is not just about the headline interest rate, it is about the total cost over the full deal period including any arrangement fees, legal fees, valuation fees, exit fees and any cashback incentives on offer. A 4.5% deal with a £999 fee can be cheaper or more expensive than a 4.7% fee free deal depending on your loan size, which is the kind of calculation that gets done badly when people are trying to do it themselves at the kitchen table.

This is genuinely where having a broker on your side pays for itself, because comparing the true cost of dozens of products across the whole market and matching them against your specific circumstances is what we do every single day, and it is not the kind of thing that benefits from a quick glance at a comparison site.

If Your Current Deal Is Ending in the Next Six Months

If your fixed rate is coming to an end this year, get in touch before you accept whatever your existing lender has put in front of you. I will compare your retention offer against a wide range of available options and tell you straight whether it is right for you or whether you are better off moving.

 Barry, The Mortgage Network - Helping you make confident decisions and plan a mortgage that works for you.

YOUR HOME MAY BE REPOSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE