Recent years have seen product transfers take on a much more significant role within the UK mortgage market. There are all sorts of different factors behind this, from lenders recognising the value of retaining existing customers to the welcome introduction of proc fees for brokers when dealing with product transfer cases.

Some industry figures have suggested that product transfers are likely to account for an even more significant portion of business in 2021, in large part due to Covid-19.

However, while product transfers have their place, there will be some clients who are far better served by making use of a remortgage instead.

Finding the best rate for clients

One of the selling points for product transfers is the fact that by sticking with the same lender, there is no need for a full underwrite. The lender already knows the client and so doesn’t need to conduct the same affordability tests all over again, even if the borrower’s circumstances may have changed.

That can be a powerful draw given the last year and a half, with all too many borrowers having had their finances impacted in some way by the pandemic.

It isn’t the case for everyone, though. There will be plenty of borrowers who will sail through those affordability tests today, just as they did years ago when you found them their current mortgage. For those clients, it’s crucial that brokers consider more than simply the ease of getting a “yes” from the lender.

After all, in many cases the biggest driver towards a deal for a client is what it will cost them.

We know from our conversations with brokers that lenders can take a radically different approach towards the rates they charge on product transfers. While some provide similar rates for new and existing customers alike, with others the interest rates on offer for product transfers are less attractive than could be attained by remortgaging elsewhere.

A busy market

The levels of activity seen within the purchase market this year have also served as a boon for product transfer business.

The Stamp Duty holiday has understandably led to plenty of potential buyers accelerating their buying plans, and the battle to beat the tax deadline meant that some conveyancers were swamped with business. Inevitably in some cases this caused service levels to slip, and the experience of those delays has spooked advisers who are concerned that their remortgage customers may suffer similarly lengthy waits for their legal work.

The reality is rather different however. In practice, a lot of legal firms have divided their teams, with dedicated members of staff focusing solely on the remortgage market rather than purchase deals. Far from your remortgage client heading straight to the back of a large queue, by working with the right legal partners you’ll instead ensure that they enjoy the expertise of an experienced team of specialists who don’t have any purchase deals to worry about.

I need to move quickly!

In some cases, the appeal of the product transfer lies in its speed. If you have a client who needs to move swiftly in order to avoid the unpleasant payment shock that comes from dropping onto their lender’s standard variable rate, then a product transfer can look like a great option. The lack of underwriting work required means that product transfers can provide a swift escape from that bill rise on the horizon.

While it’s true that remortgages may take longer than product transfers, the actual time difference can be minimal.

This is an area we’ve really focused on at eConveyancer, through the launch of our Rapid Remortgage service. We’ve seen some incredible turnarounds through the service. Once qualifying buyers complete and return their starter pack, the case is made ready for completion – subject to a mortgage offer – within 24 hours. As a result, some clients have seen their case move to full completion inside four days – even some product transfers take longer than that.

By speeding up the legal processes behind a remortgage, it means that even in those cases when the client is facing a short deadline, they do not have to accept a product transfer onto a mediocre rate and instead enjoy the full benefits of a remortgage.

Brokers take their role seriously and always want to deliver the best possible service to their clients, securing for them the cheapest rate available. As a result, a remortgage will always need to at least be part of the conversation. By thinking carefully about the businesses they partner with, brokers can ensure that remortgage timescales are comparable to those of product transfers, so that no matter what sort of deadline they face the client enjoys the full range of options to choose from.