By the end of this guide, you will be able to:
- Understand what a product transfer is and how it differs from a remortgage.
- Advise clients on the benefits and drawbacks of product transfers.
- Identify when a product transfer is suitable for a buy-to-let client.
- Recognise the key lender criteria and processes for product transfers.
What is a buy-to-let product transfer?
A product transfer occurs when a landlord switches to a new mortgage deal with their current lender rather than moving to a different lender through a remortgage. It is typically a straightforward process as it does not involve a full affordability assessment, new legal checks, or property valuations.
Most lenders offer product transfers to retain existing customers, and brokers play a key role in ensuring landlords get the most competitive rates available.
Why landlords consider product transfers
Product transfers offer several benefits to buy-to-let landlords:
- No legal or valuation fees – Unlike a remortgage, product transfers usually avoid legal costs and valuation fees.
- Faster and simpler process – The switch can often be completed within days, as there is no need for new affordability checks.
- Avoids stress testing – Many landlords struggle with stricter stress-testing requirements on new buy-to-let mortgages, making product transfers a practical solution.
- Loyalty incentives – Some lenders offer exclusive rates or incentives to existing customers who stay with them.
Potential downsides of product transfers
Despite the benefits, product transfers may not always be the best option:
- Limited lender choice – The landlord is restricted to products offered by their current lender rather than accessing the whole market.
- Potentially higher rates – Some lenders may not offer the most competitive deals compared to remortgaging with a new provider.
- Missed refinancing opportunities – A remortgage might allow for a higher loan amount, additional borrowing, or better long-term benefits.
Key considerations for brokers
When advising clients on product transfers, brokers should consider:
- Rate competitiveness – Compare the lender’s product transfer rates with other options in the market to ensure the best deal.
- Client’s long-term goals – Does the landlord need extra borrowing or a more flexible mortgage product? If so, a remortgage may be a better choice.
- Lender criteria – Some lenders only offer product transfers to clients with a good payment history or within a specific timeframe before their deal expires.
- Early repayment charges – If a landlord is exiting a fixed deal early, brokers should check for penalties that might apply.
- Portfolio landlords – Landlords with multiple properties may benefit from restructuring their finance rather than opting for a simple product transfer.
When is a product transfer suitable?
- For landlords who want a quick and hassle-free switch – Product transfers involve minimal paperwork and no new affordability checks.
- For clients who wouldn’t pass new affordability tests – Some landlords may struggle with stricter rental stress tests on new applications.
- For landlords who want to avoid remortgage costs – No legal, valuation, or broker fees can make product transfers more cost-effective.
- For clients happy with their current lender – If the lender offers a competitive deal, staying with them may be a convenient option.
When is a product transfer not suitable?
- For landlords needing additional borrowing – If a client wants to release equity or borrow more, a remortgage may be the better choice.
- For those seeking the lowest possible rate – Some lenders may offer better rates for new customers than for product transfers.
- For landlords with changing financial needs – If a client’s circumstances have changed, they may benefit from restructuring their mortgage elsewhere.
- For clients nearing the end of their fixed term – Brokers should explore remortgage options before committing to a product transfer.
Conclusion
Product transfers are an essential tool in a buy-to-let broker’s advisory toolkit, offering a simple and cost-effective way for landlords to secure a new deal without the complexities of a full remortgage. However, they are not always the best option, and brokers should assess each client’s needs carefully.
At NBTLAE, we are committed to providing mortgage brokers with the latest insights and expertise to support their buy-to-let clients. Join us at the National Buy to Let Adviser Event to stay ahead of industry developments and unlock new opportunities in the market.
