Product transfer vs remortgage: which costs less?

When your fixed rate is coming to an end, you will usually choose between a new deal with your current lender (a product transfer) and a move to a new lender (a remortgage). This guide compares the two on cost and on lender criteria, with worked examples. It is written for homeowners in the UK, including those whose job, income or immigration status has changed since they took out the mortgage. If you want to know when to start and what to do month by month, see our 6-month plan for when your fixed rate ends. This is general information, not personal advice.

What is the difference between a product transfer and a remortgage?

A product transfer (PT) moves your existing mortgage onto a new rate with the same lender. The loan, the property and the lender stay the same. Only the deal changes. Most lenders let existing customers pick from their own range, often online and in a few minutes.

A remortgage replaces your mortgage with a new one from a different lender. The new lender pays off the old loan on the completion date. Because it is a new mortgage application, the new lender checks your income, credit record and property from scratch. We walk through the process in remortgage step by step.

Most borrowers stay put. Product transfers made up 84% of refinancing in the first quarter of 2026, according to UK Finance figures reported by Mortgage Solutions, and in December 2025 UK Finance forecast £261bn of product transfers against £77bn of external remortgaging for 2026 as a whole. That does not prove staying is cheaper. Often it is simply easier.

How do the checks, costs and timescales compare?

The biggest differences are in the checks, the paperwork and the choice of deals, not only in the rate.

The rules on affordability come from the industry’s Mortgage Charter, which lenders reaffirmed in March 2026. Signatory lenders let customers who are up to date with their payments switch to a new deal with their existing lender without a fresh affordability check. FCA rules allow lenders to skip the full assessment when you are not borrowing more and nothing else material to affordability changes, so a request to change the term or repayment type can bring checks back, depending on the lender. The FCA puts the number of signatories at 47, covering around 90% of the market (FCA). It does not apply to buy-to-let.

Lenders spell this out on their own sites. Nationwide says there is no affordability check when you switch, provided you are not borrowing more. NatWest says there is no credit reference search or affordability check for a like-for-like switch, and Halifax says it charges no legal or valuation fees for switching. Practice still varies, so check your own lender’s rules.

On the remortgage side, FCA rules changed in July 2025 (PS25/11). A new lender may now use a lighter affordability assessment when you have had no payment shortfall on your existing mortgage in the previous 12 months, move without borrowing more and the new deal is more affordable than your current mortgage or a new deal indicated by your current lender. Lenders do not have to use it, and their other criteria, such as credit history, residency and employment, still apply.

What does switching really cost?

To compare fairly, add up everything you will pay over the deal period, not just the monthly payment. The main items are:

• Interest at the new rate for the length of the deal.
• Product or arrangement fee. Many deals charge one, often around £1,000, while others have none. If you add the fee to the loan, you pay interest on it too. We compare the two in mortgage product fees vs fee-free deals.
• Valuation and legal costs on a remortgage, unless the new lender covers them. Many remortgage deals include a free standard valuation and free basic legal work, or cashback instead. Free legal work usually covers a standard case only. A transfer of equity, a leasehold flat with complications or a title problem can cost extra.
• An exit fee charged by your old lender when the mortgage is paid off. MoneyHelper lists it among the costs of changing lender, and it is usually up to a few hundred pounds. There is normally no exit fee on a product transfer, because the mortgage is not repaid.
• An early repayment charge (ERC) if the new deal starts while your current ERC still applies. Our guide to the early repayment charge explains how it is worked out.
• Cashback or other incentives from the new lender, which reduce the cost.

MoneyHelper warns that changing your mortgage can cost £1,000 or more. A quick test you can do yourself: divide the extra one-off costs of the cheaper-rate deal by the monthly saving. The answer is the number of months it takes to break even. If it is longer than the deal, the lower rate may not pay off.

For context, Moneyfacts put the average 2-year fixed rate at 5.93% and the average 5-year fixed rate at 5.95% at the start of October 2026 (Moneyfacts Compare). Rates kept rising during the month, and the average 5-year fix reached 6% on 5 October (Mortgage Strategy). These figures are a snapshot, not current offers.

Illustrative example: which of three deals costs least?

This is an illustrative example. The rates and fees are assumptions for the calculation, not current offers.

Kasia and Mark owe £180,000 with 22 years left on a repayment mortgage. Their home is worth about £300,000, so their loan-to-value (LTV) is 60%. Their fixed rate ends in four months and they compare three 5-year fixed deals:

• A. Product transfer with their current lender at 6.05%, no product fee.
• B. Remortgage at 5.75%, a £999 product fee paid upfront, free valuation and free basic legal work.
• C. Remortgage at 5.60%, a £1,999 product fee added to the loan, free valuation and free basic legal work.

In this example:

• Option B costs about £1,650 less than the product transfer over five years. The monthly saving of about £32 pays back the £999 fee in just over 31 months.
• Option C has the lowest rate but is not the cheapest. Because the £1,999 fee is added to the loan, it costs about £204 more than option B over five years, and at the end Kasia and Mark still owe about £1,356 more than with B.
• If their current lender offered the same 5.75% on a product transfer with no fee, staying would win, because there would be no fee to recover.

The figures are simplified. They assume no early repayment charge, no exit fee, remortgage incentives that cover the valuation and basic legal work, the same LTV band with both lenders and no mortgage advice fee. An exit fee of, say, £150 would add about five months to option B’s break-even point. Your own figures will depend on your balance, term, rates and fees, and you can test them in our mortgage calculator.

When is a lower rate not worth the fee?

On a smaller balance, the fee can outweigh the lower rate. Take the same rates and fees as above, but a balance of £60,000 with 15 years left.

The remortgage lowers the payment by about £10 a month, so the £999 fee would take about 103 months to recover, well beyond the 5-year deal. Over five years, the product transfer is about £160 cheaper here. The smaller the balance, the bigger the share of any saving that fixed fees eat up.

How is your LTV worked out on a product transfer?

On a product transfer, your lender usually works out your LTV from an estimate of your home’s value rather than a new survey. That estimate is typically based on a house price index or an automated valuation model. If prices in your area have risen faster than the index suggests, or you have improved the property, the estimate may undervalue your home and keep you in a higher LTV band.

LTV bands matter because rates are often lower at, say, 60% or 75% than just above those thresholds. Some lenders let you submit your own estimate of value on a product transfer, which may lead to a physical valuation and a slower switch, and the result could go either way. A remortgage always comes with a fresh valuation by the new lender, which can help if your home has gone up in value. Ask your lender which value it uses before you compare. Our guide to the loan-to-value ratio explains how the bands work.

What if your circumstances have changed since you took out the mortgage?

This is often what decides the route. A like-for-like product transfer usually looks only at whether you are an existing customer, up to date with payments and not changing the loan. A remortgage puts you through the new lender’s full criteria again.

These are general patterns, not rules every lender follows. Each lender sets its own criteria, and a few lenders do ask on a product transfer whether anything material has changed, for example if you have moved abroad or now let the property out. We talk about lender criteria here, not immigration rules: what matters for a mortgage is what each lender accepts.

When does a product transfer often make more sense?

A product transfer is often the stronger choice when a new lender might not accept you, or would not give you a lower total cost. Typical situations:

• Your circumstances have changed, as in the table above.
• Your balance is small, so fees take a large share of any saving, as in the second example.
• Your current lender’s rate is close to the best on the market, or it lets you switch without a fee.
• Time is short. A product transfer can often be done in days, while a remortgage usually takes weeks.
• You have a Help to Buy equity loan in England. Staying with your lender without borrowing more needs no application to Homes England, although your lender may need a deed of postponement. Moving to a new lender without borrowing more needs Homes England’s permission and a £115 admin fee (GOV.UK).

When does a remortgage often win?

A remortgage tends to come out ahead when another lender offers a lower total cost, or something your current lender does not. Typical situations:

• Lower rates elsewhere once all fees are counted, as in the first example.
• Your LTV has improved. If your home has risen in value or you have paid down the loan, a fresh valuation by a new lender may put you in a lower band.
• You need to change the mortgage itself: borrow more, shorten or extend the term, switch from interest-only to repayment, or add or remove a borrower. These usually need a full assessment even with your current lender, so the product transfer’s advantage shrinks. Changing who owns the home is covered in what is a transfer of equity.
• You want a type of deal your lender does not offer, such as a particular fixed-rate length, a tracker with no ERC or an offset mortgage.
• Your position has improved: higher or steadier income, a stronger credit record or a settled immigration status can open up lenders that would not have accepted you before.

Can you keep a product transfer as a back-up while you remortgage?

Often yes, but watch for fees and overlapping deals. Many lenders let you secure a product transfer a few months before your fixed rate ends, and you can apply for a remortgage at the same time. That gives you a fallback if the remortgage is delayed or declined.

There are two catches. First, MoneySavingExpert warns that if you pay a product fee upfront for the product transfer and then cancel it, you may not get it back. Lenders’ terms differ, but a fee added to the loan or a fee-free deal makes a better back-up. Second, if the remortgage goes ahead, cancel the product transfer in good time. Otherwise you could end up with a new deal at your old lender that carries its own early repayment charge. How far ahead you can book differs between lenders, and our 6-month plan sets out the timing.

How Extend Finance can help

Extend Finance is a whole-of-market broker with access to products from more than 100 banks and lenders. We can compare your lender’s product transfer offer with remortgage options across the market, work out the total cost of each over the deal period and tell you which lenders’ criteria fit your situation, including if your job, income or visa has changed. Many lenders also let brokers arrange product transfers, so we can handle whichever route you choose. Our advisers speak English and Polish. Any applicable mortgage advice fee is disclosed to you before you decide to proceed.

Summary

Neither route is always cheaper. A product transfer is usually quicker and simpler and often has no new affordability check, so it can be the better choice when your circumstances have changed or your balance is small. A remortgage gives you the whole market and can cost less overall when another lender’s rate is lower or your home has gone up in value. Add up interest and all fees over the deal period before you decide, and get in touch a few months before your fixed rate ends if you would like us to run the numbers. The first consultation is free and comes with no obligation.