Product Transfer or Remortgage? What to Do When Your Fixed Deal Is Ending

A jumpy week for rates, and a decision landing on a lot of desks

This week average two-year fixed rates jumped to 5.57% and five-year fixed to 5.60% — the biggest daily moves since around the start of April — after renewed fighting in the Middle East pushed up the cost of the swap rates lenders price against. The Bank of England's Monetary Policy Committee meets again this Thursday, 30 July. Most economists still expect the base rate to hold at 3.75%, but markets have shifted from pricing in cuts to pricing in a real chance of hikes further out, and two MPC members have already voted for a rise at recent meetings.

If your current fixed deal runs out in the next six months, you're probably watching all this and wondering what to actually do about it. In the middle of that decision sits a question I get asked most weeks: should you take a product transfer with your existing lender, or go through a full remortgage? They're not the same thing, and picking the wrong one can cost you real money.

What's actually the difference?

A product transfer is simply moving onto a new rate with your current lender when your existing deal ends. No new application, no fresh affordability check, usually no legal work and no valuation. Your lender sends you a short list of rates a few weeks before your deal expires, you pick one online or over the phone, and that's largely it.

A remortgage is a brand new mortgage application, potentially with a different lender entirely. It involves a full affordability assessment, a credit check, a property valuation and legal work, either through a solicitor or the lender's own conveyancing panel. It takes longer, typically four to eight weeks, but it opens up the whole market rather than just your existing lender's rates.

When a product transfer makes sense

It's usually the stronger option if:

1. Your circumstances have changed since your last application — a new job with a shorter track record, more debt, or a lower credit score than before. A product transfer skips the affordability re-test entirely.
2. You're short on time and your deal is about to lapse onto the lender's standard variable rate, which is often three to four percentage points higher.
3. Your loan-to-value has crept up because local prices have softened, which could push you into a worse pricing bracket if you apply fresh with a new lender.
4. You want the path of least resistance and your current lender's rates happen to be competitive anyway.

When remortgaging is worth the extra effort

It tends to pay off if:

1. Your loan-to-value has improved — you've paid down capital or your property's value has risen — because a lower LTV band on the open market can mean a meaningfully cheaper rate than your existing lender will offer as a straight transfer.
2. You want to raise capital, for home improvements or otherwise, which most product transfers won't let you do.
3. You want to change the mortgage term, switch from interest-only to repayment, or restructure the borrowing in a way a product transfer can't accommodate.
4. Your existing lender's transfer rates simply aren't competitive, which does happen, particularly with some of the larger high-street names.

The rule almost everyone misses

Most lenders let you lock in a product transfer rate up to six months before your current deal ends, and a remortgage offer typically stays valid for three to six months too. That means you don't have to wait until the last minute to decide, and with rates as jumpy as they've been this month, locking something in early gives you a safety net. If rates fall further before your deal actually starts, most lenders will let you swap to a better rate within their own range at no extra cost; if rates rise instead, you're already protected at the rate you locked in.

My practical take

With the numbers moving around week to week, I'm telling clients whose deals end this year to start the conversation now rather than in the final few weeks before expiry. Get a product transfer rate on the table as your fallback, then use the time before completion to properly explore whether a remortgage would beat it. It costs nothing to compare both, and having a locked-in rate removes the pressure of trying to time a market that, this week especially, isn't cooperating with anyone's predictions.

If your deal is ending in the next six months, get in touch and I'll run both routes side by side for you. It usually takes less time than people expect, and it's the difference between drifting onto a worse rate and actually choosing one.

Kindest regards

Ian

Ian A Moore CeMAP — Director, IM Mortgage Consultancy Limited

Your home may be repossessed if you do not keep up repayments on your mortgage. IM Mortgage Consultancy Limited is authorised and regulated by the Financial Conduct Authority. This article is for general information only and does not constitute mortgage advice; rates and figures quoted were accurate at the time of writing and are subject to change.