A product transfer keeps you with your existing lender on a new rate. A remortgage moves you to a different lender entirely. The transfer is faster and simpler; the remortgage opens the whole market and usually finds a better rate. Which wins depends on your circumstances as much as on the numbers.
Your existing lender will only ever tell you about one of these options. That is worth remembering when their letter arrives.
What a product transfer actually is
You stay put. Same lender, same mortgage account, same balance — just a new interest rate applied to it.
What it avoids: no new valuation, no solicitor, no legal fees, and in most cases no fresh affordability assessment. It can complete within days, sometimes online.
What it costs you: you only ever see one lender's rates. If your lender is uncompetitive at your loan to value, you take that hit.
What a full remortgage involves
A new lender pays off your existing mortgage and takes over.
What you gain: the whole market. Ninety-odd lenders competing, which usually means a better rate, and the ability to borrow more, change the term or restructure.
What it costs: four to eight weeks, a valuation, legal work, and a full affordability assessment as though you were a new borrower. Many remortgage deals include free valuation and free basic legal work, so the cash cost is often lower than people assume — but the time and the scrutiny are real.
When the transfer wins
Your circumstances have worsened. This is the big one. If your income has dropped, you have become self employed, you have taken on childcare costs or picked up a credit problem, a new lender will reassess you from scratch and may decline. Your existing lender usually will not reassess affordability on a straight product transfer. It is the safe harbour.
You need it done quickly. Days rather than weeks. If your deal ends in a fortnight, a transfer stops you landing on the standard variable rate while a remortgage completes.
The numbers are close. Once you account for fees, a transfer at a slightly higher rate can beat a remortgage at a slightly lower one.
Your property is awkward. Non-standard construction, a short lease, a flat above commercial premises. Your current lender has already accepted it. A new one might not.
When the remortgage wins
You want to borrow more. Home improvements, debt consolidation, a deposit for another property. Some lenders allow additional borrowing alongside a transfer, but the market gives you far more room.
Your loan to value has improved. If your Leicester property has gained value, or you have paid down a chunk of the balance, you may now sit in a much better band. A new lender will price to that; your existing one will too, but only against its own range.
Your lender is uncompetitive. Some lenders price transfers keenly to retain customers. Others do not.
You want to change the structure. Shortening the term to clear the mortgage sooner, lengthening it to reduce monthly cost, splitting between fixed and tracker.
The comparison people get wrong
Comparing the two headline rates and picking the lower one.
The real comparison is total cost over the deal period:
- The interest you will actually pay
- Product or arrangement fees on each option
- Valuation and legal costs, where not free
- Any early repayment charge, if leaving before your current deal ends
- Exit or deeds release fees
A remortgage at a lower rate with a £1,499 product fee can easily lose to a transfer at a slightly higher rate with no fee, particularly on a smaller mortgage balance. On a large balance, the same fee is trivial and the lower rate wins comfortably.
The right answer depends on your balance, which is why a general rule does not exist.
The third option nobody mentions: a second charge
There is a route that sits between the two, and it is worth knowing exists.
A second charge loan is separate borrowing secured against your property, sitting behind your existing mortgage. Your current mortgage stays exactly as it is — same lender, same rate, same end date — and the new borrowing runs alongside it.
It is genuinely useful in three situations:
- You are locked into an excellent rate and remortgaging the whole balance to raise a modest sum would mean losing it, or paying a large early repayment charge to escape it
- Your existing lender will not lend more but you have equity and the affordability works elsewhere
- Your circumstances have changed in a way that would fail a full remortgage assessment on the entire balance, but not on a smaller additional amount
The trade-off is that second charge rates are typically higher than first charge mortgage rates, and there are separate fees. It is rarely the cheapest option in isolation — it wins when protecting a very good existing rate is worth more than the premium on the smaller loan.
It is not right for most people. But where it fits, it fits well, and neither your bank nor a comparison site will suggest it.
What we do
We run both. We ask your existing lender what they will offer you, we search the market, and we present the total cost of each over the deal period rather than the headline rate.
Sometimes the answer is that your own lender's transfer is the best available deal and we should take it. We will tell you that.
Call 0116 277 7536 or see remortgage advice in Leicester.
More guides: remortgage guides for Leicester.
