In this podcast episode, Sarah Tucker talks about product transfers, the main facts you need to know and why using a broker is still important.
What is a Product Transfer and when do I need to consider one?
A product transfer is as it sounds – it’s when you transfer your mortgage product and it’s most beneficial for those of you who have a rate you are tied into at the moment.
You have a mortgage and a rate, which will end at some point that you’ve secured – particularly if you’ve secured yourself a fixed rate, there will be an end date on it.
It’s really good to make a note of that date as quickly as possible in your diary, because otherwise you’ll forget it and then you have to try and find out. If you’re with The Mortgage Mum, we’ll let you know 6- months before that rate comes up.
Generally your lender will get in touch with you 3-4 months before, sometimes earlier. They will let you know that your rate is coming up for renewal, but it’s a good idea to speak to a broker because they’re going to be able to look at the whole market for you and give you the best advice as to what your next step should be taking everything into account.
A product transfer can be the only option for some people and here is why…
If your rate is coming up to its end in the next 6-7 months, or even in the next year, a product transfer can be really, really useful if your scenario has changed since your last mortgage. Perhaps you’ve had a baby since your last mortgage, perhaps you’ve changed jobs, perhaps you’ve gone from full-time to part-time, perhaps you’ve just started a company, perhaps you’ve become a contractor, perhaps you don’t have any accounts yet – these are the typical scenarios where a product transfer can be really, really useful.
Lots of you, quite understandably, don’t want to talk to a broker or your bank because your situation has changed and you’re worried it’s going to affect things…
Please do not sit in silence. Speak to a broker because there are lots of people out there, especially with the COVID pandemic, who are in the same boat as you, who think that if they tell their bank, they’re going to put themselves in a tricky position. It’s not the case and it’s not how it works.
A product transfer is basically where your rate comes to an end and instead of going to another lender, or instead of staying on your variable rate, you find another product with the same bank and you switch it or you transfer it. That’s as simple as what it is.
It can also be called a rate switch, a product switch or a product transfer. Sometimes it’s good for you, even if you can remortgage, and that’s where a broker comes in because the broker is going to look at the whole market.
How does a Product Transfer work?
The first thing we do is look at the market and look to see what the rates are and compare what’s out there. Often, what was the cheapest lender two or three years ago when you first got the mortgage is not the cheapest lender now, and that’s the beauty of working with a broker. We will work that out for you. We will look at all of the options and we will show you all of the options. And, if it is the best thing for you to switch with your current lender, we can take care of the product switch for you.
So it works exactly the same way as a mortgage, except we ask you for less paperwork.
So, for us, it’s different with every mortgage lender and broker, but we would typically ask for the last three months’ bank statements, proof of ID and residence and proof of your income as well. We don’t ask for as much paperwork, but we do still need to get an overview of your current situation.
There’s lots of you out there who actually can’t remortgage, who actually wouldn’t get the mortgage they even have now and we understand that lots of you are worried about that. So, if a product switch is available to you now, a lender does not take into account your income. Us brokers do look at your income and we do have a conversation around that because it’s our duty and responsibility to make sure you can afford your mortgage. But it’s really important that you know, it’s looked at completely differently…
We’ll be looking at your bank statements and we’ll be looking at what the impact of your changes have been, and will be, in regards to your future mortgage payments. Your income is not assessed by your current lender in the same way as a new mortgage.
If you’re not borrowing any more, and you’re not changing the term, they will just let you choose a new product and then it’s up to us to make sure that you’re going to be okay with that new product, with any new scenarios and that you understand what your options are now and in the future.
Why should you use a broker for your Product Transfer?
You can login to your current lender and switch your rate. However, the benefit of using a broker is you may have questions that will need answering, but you’re also going to get much more well-rounded advice. We will talk to you about your scenario now and in the future, so that you feel more comfortable when you’re the one logging in and choosing a rate.
Talking to a broker means you’re getting the benefit of any advice you need and an opportunity to review your finances, to review what’s going on and where you see yourself in a few years’ time. It’s not all about the rate. It’s about getting value and really understanding where you’re at with your finances, your money and your mortgage.
It’s tempting to log in, click a few times and be done, but trust us, it’s a good opportunity to get everything reviewed including your protection and your money, and then you’re nice and organised for the next few years or so.
Sometimes it’s worth taking the time to have a conversation as brokers will make it as easy as possible for you. So if you do get your letter through the post from your lender – get in touch, or if you follow this episode up with a little check to see how long you’ve got left on your rate (and it’s really good to stick it in your diary), you can even let us know if you want us to stick it in our diaries too!
Take the time to review your mortgage rate at least six months before, so that you’re not going to be in a rush. We can make time for those important conversations and checks, but if you are at all worried please talk to us, we’re here to help. We’d love to help you with your product transfer or your remortgage in the near future. It’s much easier than you think, we promise!