Advantages and Disadvantages of opting for a mortgage Product Transfer and staying with your exciting provider rather then a Remortgage.
As part of my role as a Mortgage Advisor I look after my clients with their initial mortgage (as you would expect) but also take great pride when their mortgage comes up for renewal by using mortgage product transfer or remortgages to save them money.
As a whole of market independent mortgage broker I can offer mortgage advice without bias or restriction, and will not channel applications in certain directions for short term game. A mortgage product transfer make me less money but if the deal is right for you – I will tell you even if it my financial detriment – as it’s the right thing to do!
As part of my transparency I will run through the pros and cons of using either a product transfer or remortgage, and as such I often pick up clients that either went directly to the Lender or used another Broker initially.
Below are generic guidelines on the advantages and disadvantages of a mortgage product transfer on residential properties. It’s important to stress these are generalisations and every Lender will have their own rules and every clients’ needs and circumstances will be different. I can individually guide on suitable route for you to take.
No charge. Normally an indexed ‘desk top’ valuation is applied.
The downside is this is unable to detect significant home improvements and exact current values unless similar properties have been sold recently in the vicinity.
Assessed by a Surveyor so should reflect the ‘true’ value.
Increased equity assessment can lead to better products and the ability to borrow more.
There are readily available remortgage products that include a ‘free’ basic valuation for mortgage purposes only.
The Lender could be rigid to any changes to the existing mortgage other than the rate. So if you wanted to pay the mortgage off earlier by reducing the term, or extend the term to reduce your monthly payment this option may not be open to you.
There are readily available remortgage products that include a ‘free’ basic legal service for mortgage purposes only.
This is normally a separate further advance application with full underwriting and documentation required. The rate choice is often restricted, the reason for the funds prohibitive, and there would need to a reasonable amount of equity left after the transaction i.e. typically 25%.
Any legal reason apart from the repayment of a tax bill and business start-ups. Depending on the lender borrowing may be available to 95% of the property value.
Niche Advice will offers suitable advice to new and existing customers on the mortgage product transfer process. To find out how we can help you complete the online enquiry form under our Contact tab on this website or call T: 020 7993 2044.
Author: Payam Azadi
Payam Azadi is a partner at Niche Advice who are whole of the market Independent Mortgage Brokers. His role is very much focused on Property financing both on residential and commercial lines. To get in contact with him please click here.
