Is the mortgage market turbulence getting you down? Have you got a mortgage-related question you need answering? Email in, and we will get one of our experts to reply. Nick Mendes, mortgage technical manager at John Charcol, has given his advice to a reader below. If you have a question for our experts, email us at money@theipaper.com.
Question: My fixed-rate mortgage is coming to an end soon and I owe around £300,000. I have seen a new lender offering a rate that is about 0.05 percentage points cheaper than the product transfer rate with my current lender. The savings look small, but I do not want to overpay if there is a better deal elsewhere.
Is it worth switching lenders for such a small rate difference, or is it usually better to stay with the same lender and do a product transfer? What would a mortgage broker normally advise?
Answer: Honest answer: on a £300,000 mortgage, a 0.05 percentage point difference is unlikely to justify switching lender on its own. But it still deserves a proper look before you decide.
That gap works out at roughly £150 a year, or somewhere between £5 and £10 a month on a repayment mortgage, depending on your term and rate. Not nothing, but not the number your decision should rest on.
What matters more is what switching costs you in time, paperwork, and risk.
A product transfer with your existing lender is straightforward. There is no new affordability assessment, no solicitor, no valuation, and the process can complete quickly. For most borrowers coming off a fixed rate, that simplicity has real value.
Lenders do not reassess your full financial position in the same way, which means less exposure if your circumstances have shifted since you first took the mortgage out.
And circumstances do shift. A new job, a period of self-employment, a change in income, a missed payment or two on your credit file. None of these necessarily rule out a remortgage, but they can slow things down or affect the rate you are offered. With a product transfer, most of that risk is removed.
A remortgage to a new lender can absolutely be the right move, but it needs to earn its place. Product fees, valuation charges, and slow-moving free legal work can erode a small rate saving faster than most borrowers expect.
A new lender will also carry out their own valuation of your property, which could place you in a different loan-to-value band and change the deal you qualify for. If your property comes in slightly lower than expected, the rate you were counting on may no longer be available.
Timing is worth thinking about carefully, too. If your fixed rate is ending soon, a product transfer is often the safer option. Remortgage applications take time and if completion runs past your current deal end date, you could find yourself sitting on the lender’s standard variable rate for weeks while the paperwork catches up. On a £300,000 balance, that can be a costly few weeks.
If you have three to six months before your deal ends, you have more room to explore the market properly without that pressure.
A broker’s job in this position is to compare both routes on total cost rather than the headline rate alone. That means working through the full picture over the initial deal period, arrangement fees, any cashback, legal costs, valuation assumptions and the realistic likelihood of the application going through smoothly. The cheapest rate and the best overall deal are not always the same thing.
It is also worth knowing that a broker can often reserve a product transfer with your current lender while keeping an eye on the wider market. If a better option appears before your new deal starts, you are not committed. That flexibility is useful when rates are moving.
At 0.05 per cent, the difference alone probably does not justify the effort and risk of switching lenders. But the right call depends on your full picture, not just the rate. Get both options properly costed before you decide, because occasionally the numbers do stack up in favour of moving, and on a mortgage this size, you would want to know either way.
