Remortgaging
Product transfer or remortgage? Here is how to tell.
When your lender writes to offer you a new rate, it is tempting to treat the letter as the whole decision. It is not. A product transfer and a remortgage can end up thousands of pounds apart over a fixed term, and the cheaper one is not always the one that lands in your inbox first.
What a product transfer actually is
A product transfer keeps you with your existing lender and simply swaps you onto one of its current deals. There's no new affordability assessment, no valuation, and in most cases no solicitor, because you already hold the loan and the lender already holds the security on your home. It typically completes in days rather than weeks, sometimes with a few clicks in an online account.
That speed is exactly why lenders like offering it, and why it suits some borrowers well. If your income has dropped, your credit record has picked up a mark, or you're now self-employed after years on a payslip, a product transfer sidesteps the affordability re-check that a full application would trigger. For anyone whose circumstances would make a new lender say no, the product transfer might be the only option on the table.
What a remortgage actually is
A remortgage moves your loan to a different lender entirely. That means a new application, a new valuation, and a fresh affordability check against today's income and outgoings, not the numbers from when you first bought. It usually takes six to eight weeks to complete and can involve a product fee, though many deals offer free legal work and a free valuation to offset that.
The upside is access to the whole market rather than one lender's shelf of products. If your loan-to-value has improved, because you've paid the balance down or the property has gone up in value, a remortgage is also how you actually get repriced into a cheaper LTV band. A product transfer with your existing lender may or may not pass that improvement on automatically.
Why lenders push the product transfer
Lenders make more from keeping a customer than from losing one, and a product transfer is the cheapest way for them to do that: no underwriting, no valuation, no risk of you shopping around and finding something better. The letter your lender sends is written to make staying feel like the default. It rarely says outright that a lower rate might exist elsewhere, because there's no reason for the lender to volunteer that.
None of that makes the product transfer a bad deal. It just means the offer in the letter is a starting point to beat, not a number to accept on sight.
A worked comparison
Say you have £250,000 outstanding and your fix is ending. Your lender's product transfer letter offers 4.55% on a new two-year fix, with no fee and no valuation. Shopping the open market, you find a two-year fix at 4.15% from a different lender, with a £999 product fee and a free valuation.
The rate gap is 0.4 percentage points. On £250,000, that's roughly £1,000 a year in interest, or around £2,000 over the two-year term. Against that, the remortgage costs you the £999 fee, plus the time cost of a valuation and legal work most lenders now bundle in for free. Net, switching saves you around £1,000 over the two years, even after the fee.
Now change one number: if your balance were £90,000 instead, the same 0.4-point gap saves only about £360 a year, or £720 over two years. Subtract the £999 fee and the product transfer comes out ahead by around £280. The maths flips because the fee is fixed but the rate saving scales with your balance. Below a certain balance, a fee-heavy remortgage stops being worth it even when the headline rate looks better.
The one thing a product transfer can't fix
If your loan-to-value band has genuinely improved, because your balance has fallen or your home's value has risen, a remortgage is the more reliable way to be repriced into that band, since it comes with a fresh valuation. A product transfer sometimes offers a like-for-like rate roll rather than reassessing your LTV, so if your equity position has moved a lot, it's worth asking your lender directly whether the new offer reflects it, rather than assuming it does.
If you're weighing this decision at the same time as your fix ending, the two questions are really one question: what does staying cost against what switching costs, once every fee and rate is on the table.
How to actually decide
Get the product transfer offer in writing first, since it costs you nothing to hold as a baseline. Then get at least one whole-of-market rate quote at your current loan-to-value, including the fee and any free-legals or free-valuation incentive. Run both through your actual balance and the number of months you'll hold the deal, not just the headline rate. If you're still inside your current deal and would pay an early repayment charge to leave early, check that sum too; breaking a fixed rate early is a different calculation with its own break-even date.
The comparison only takes a few minutes once you have both numbers in front of you, and it's the only way to know which letter is actually worth signing.
Frequently asked questions
What is the difference between a product transfer and a remortgage?
A product transfer moves you to a new deal with your current lender, using no new affordability check, no valuation and usually no solicitor. A remortgage moves your mortgage to a different lender, which means a fresh application, a valuation and often fees, but it opens up the whole market rather than just your existing lender's rates.
Is a product transfer always cheaper because there's no fee?
Not necessarily. A product transfer often carries no fee and no valuation cost, but the rate itself is usually slightly higher than the best rate a new lender would offer you. Whether that gap in rate outweighs the fees you'd pay to remortgage depends on your balance and how long you'll hold the new deal.
Do I need a new affordability check for a product transfer?
Almost never. Product transfers are the main route people take when their income, credit record or circumstances have changed since they took out the mortgage, because the lender is not re-assessing you, only re-pricing the same loan.
Compare both, free
The free timeline takes your balance, your product transfer offer and a remortgage quote, and shows you which one wins over the term, in about two minutes. For £7.99 we then watch your dates and email you before either offer expires.
Examples are illustrative and rounded. Your own mortgage offer and lender confirm your actual figures and dates. This is information, not financial advice. For advice on your circumstances, speak to a mortgage adviser regulated by the FCA.