Product transfer mortgages, switching and porting

A product transfer is a switch from one mortgage deal to another with the same lender, usually when a fixed or tracker period is ending. The balance, term and property stay the same, and only the rate and product change. It is also called a rate switch or mortgage switch, and it avoids moving onto the standard variable rate.

Because the lender already holds the mortgage, a product transfer usually needs no new valuation, no solicitor and no fresh credit search. Most lenders let existing borrowers choose a new deal a few months before the current one ends, so the new rate starts as soon as the old one finishes.

The main difference is choice. A product transfer offers only the current lender's range for existing customers, while a remortgage to a new lender opens up the whole market. A remortgage can also change the term, add borrowing or move to a different type of product, but it takes longer and involves a new application.

A product transfer is often quicker and simpler, and it can suit borrowers whose income, credit or property has changed since they first borrowed, because most lenders do not reassess affordability when the loan is not increasing. A remortgage elsewhere may give a lower rate or fee, so comparing the two on total cost is the usual first step.

Some borrowers check the market first and then ask their lender to match or improve on what they find. Lenders set their own ranges for existing customers, which can be the same as, or different from, the deals offered to new borrowers.

When a borrower stays with the same lender and does not borrow more, most lenders offer a new deal without a full affordability assessment, as long as the mortgage is up to date. FCA mortgage rules allow this where nothing material changes about the loan, which helps borrowers whose circumstances have become harder since the original mortgage.

Borrowing more, changing the term or adding or removing a borrower usually brings a fuller assessment, even with the same lender. Borrowers who are behind on payments may be offered fewer options, and lenders look at each case on its own facts.

Most lenders release product transfer offers a few months before the current deal ends, and the new rate starts when the old one finishes, so there is no gap on the standard variable rate. Choosing early locks in a rate, and some lenders let borrowers change to a lower-priced deal before it starts if rates fall.

Switching before the current deal ends usually brings an early repayment charge, even with the same lender, unless the lender allows an early switch close to the end date. The offer document and the lender's terms show the exact rules and dates.

Porting means moving an existing mortgage deal, with its rate and remaining fixed period, from the current home to a new one. It lets a borrower who is moving keep the deal and avoid an early repayment charge. Most mortgages are portable, but the new property and the borrower both have to meet the lender's criteria again.

A port is treated as a new application for the new property. The lender values the new home and checks affordability, and the borrower needs a solicitor for the sale and purchase. If the move needs more borrowing, the extra amount is usually on a separate product at the lender's current rates, so the mortgage can end up split across two deals with different end dates.

Porting can fail if the lender does not accept the new property, if affordability no longer meets its rules or if the timing between the sale and the purchase does not match its process. Some lenders require the purchase to complete on the same day as the sale, or within a short period, to keep the deal.

Downsizing can also bring an early repayment charge on the part of the balance that is paid off. Where porting does not fit, a remortgage to a new lender at the time of the move is the alternative, though early repayment charges on the old deal then apply. How the two routes compare on cost is covered in the guide to remortgage costs and fees.