Remortgage or product transfer?
A remortgage replaces your current first charge with a new one, usually at a different lender. A product transfer keeps the same lender and the same account, and only changes the rate and term of the deal sitting on top. Both can cut the monthly payment. They are not interchangeable.
Product transfers win on speed and friction: often no solicitor, no valuation, and a lighter affordability check. They lose when your current lender is not the cheapest on the day, which is common. A remortgage wins on price when the rest of the market is keener, and it is the only route if you need to borrow more than your current lender will allow, or if that lender will not keep you at all.
The early repayment charge is the whole question
If you are still inside a fix, leaving usually costs a percentage of the balance. A 3% charge on a £200,000 mortgage is £6,000. That has to be earned back by the monthly saving before the new deal ends, or the switch is theatre.
Worked example. £220,000 outstanding, 14 months left on a 4.8% fix, ERC 2% (£4,400). A new five-year fix at 4.1% saves about £80 a month.
- Saving over the remaining 14 months: £1,120
- Charge to leave now: £4,400
- Net position if you switch today: £3,280 worse
Waiting out the 14 months and switching with no ERC is the better trade in this case. The opposite is true when the remaining term is long and the rate gap is wide. Run the numbers; do not assume.
When a secured loan is the better tool
Remortgaging to raise extra money replaces the whole first charge. If that first charge is on a cheap rate with a painful ERC, you are throwing away the cheap bit to get at the equity. A second-charge secured loan sits behind the existing mortgage, leaves it untouched, and funds the lump sum on its own terms.
That is usually the right structure for home improvements, a tax bill, or consolidating other debts when the first mortgage is still worth keeping. It is the wrong structure if the first mortgage itself is expensive or about to revert — in that case, replacing it and raising the extra in one go is cleaner.
What it costs to switch
- Product / arrangement fee — £0–£2,000, sometimes added to the loan.
- Valuation — often free on remortgage products; not always.
- Legal / conveyancing — frequently included; check rather than assume.
- Early repayment charge on the old deal, if you leave early.
- Adviser fee — £499 on completion if you proceed, shown next to every rate and included in the total repayable.
A no-fee remortgage at a slightly higher rate can beat a headline rate plus a four-figure fee over a two-year fix. Compare the total cost over the deal, not the rate on the tin.
Common questions
When should I start looking at a remortgage?
When should I start looking at a remortgage?
Around six months before your current deal ends. That is long enough to get an offer that will still be valid when you complete, and short enough that the rate you are quoted is still relevant. Leaving it until the last month is how people roll onto a standard variable rate for longer than they meant to.
Will I pay an early repayment charge if I remortgage now?
Will I pay an early repayment charge if I remortgage now?
If you are still inside a fixed or discounted period, usually yes — often 1–5% of the outstanding balance, declining as the deal ages. The arithmetic is whether the monthly saving over the rest of the term beats that charge. Sometimes it does; often it does not. An adviser will run both numbers before you apply.
What is a product transfer, and is it better?
What is a product transfer, and is it better?
A product transfer is staying with your current lender on a new deal. It is usually faster, needs less paperwork, and often no valuation or solicitor. The rate is only as good as that one lender's range. A remortgage to a new lender opens the rest of the market. The right answer is whichever is cheaper after fees, not whichever is easier.
Can I remortgage to release equity?
Can I remortgage to release equity?
Yes, if there is enough equity and the new loan still passes affordability. The extra funds can go to home improvements, a deposit on another property, or consolidating more expensive debts. Releasing equity by remortgaging disturbs your whole first charge — if the only reason is a lump sum and your current rate is cheap, a second-charge secured loan is often the better tool.
Can I remortgage with bad credit?
Can I remortgage with bad credit?
Often, especially if the issues are older and you have built equity. The high street may decline a case a specialist will take. Recent arrears on the mortgage you are remortgaging are the hardest to place — that is evidence on the exact obligation being refinanced.
How long does a remortgage take?
How long does a remortgage take?
A straightforward product transfer can complete in two to three weeks. A remortgage to a new lender is typically four to six weeks, longer if the valuation or legal work snags. Start early enough that a delay does not dump you onto the SVR.
Related
Product transfer vs new lender, timing, and the costs people miss.
When a second charge beats disturbing a cheap first mortgage.
Specialist options if adverse credit is blocking a high-street switch.
Raise funds without replacing your existing mortgage.
Important: Information on this page is for guidance only and does not constitute financial advice. Early repayment charges, product fees and rates vary between lenders and change over time. Your home may be repossessed if you do not keep up repayments on your mortgage. CleverCompare is an introducer appointed representative of Charles Frank Finance Limited, which is authorised and regulated by the Financial Conduct Authority.