For existing mortgage holders, remortgage can be an attractive option if you want to stay on the most competitive rates in the market. But what if you’re looking to switch products within your existing lender?
With a product transfer mortgage, you can remain with your existing lender but switch to a better deal or different type of loan. It is a feasible choice where you can seamlessly transition into a new agreement with your existing lender and avoid the hassle of extensive paperwork.
However, before you start the process, an intriguing question may arise in your mind: “Can you be declined a product transfer mortgage?”
The answer is yes, you can be declined a product transfer mortgage. Lenders will assess your creditworthiness and check whether you meet their criteria before approving your application for a product transfer.
What is a Product Transfer Mortgage?
A product transfer mortgage is essentially a new mortgage agreement with the same lender. You can switch to a better deal or different type of loan for a more favourable interest rate and potentially new terms while remaining with your existing lender.
With product transfer mortgages, lenders may not check your credit history or valuation of your property again. However, they will still assess the affordability of the loan and any existing debt you have to ensure that it is a suitable option for you.
However, if a borrower wants to increase the size of their mortgage or refinance their current mortgage, the lender will conduct a full assessment, and the debtor must meet certain criteria to be accepted.
Product Transfer Mortgages vs Remortgaging
A product transfer mortgage is not the same as remortgaging. With a product transfer mortgage, you are only changing the terms of your existing loan agreement with the same lender. On the other hand, when you remortgage, you refinance with your current lender, or you move from one lender to another and request a new mortgage agreement.
While product transfer mortgages offer convenience, they may not always be the most cost-effective option.
In some cases, borrowers might find better deals and lower interest rates by remortgaging with a new lender. Remortgaging allows borrowers to shop around and take advantage of the competitive mortgage market.
However, remortgaging can involve additional costs, such as property valuation and legal fees. Borrowers should carefully weigh the potential savings from remortgaging against the convenience and cost-effectiveness of a product transfer mortgage.
Read More: How Long Does It Take to Release Mortgage Funds?
Can You Be Declined a Product Transfer Mortgage?
Yes, you can be declined a product transfer mortgage. Product transfer mortgage isn’t always straightforward. Depending of the type of product transfer, there are certain scenarios in which you can be declined a product transfer mortgage.
Typically, lenders will assess your application based on whether you meet their criteria or not. Some of the most common reasons include:
- Poor credit history: A bad credit rating or missed loan payments may lead to your application being rejected.
- Insufficient income or outgoings: Lenders will review your current income and expenditure to check that you can afford the monthly repayments. If there is a large discrepancy between the two, you may be declined.
- If the lender finds that your financial or credit situation has changed since the initial mortgage agreement, they may not approve your application for a product transfer. This includes if you have recently had County Court Judgements (CCJs) against you, defaults on your payments, or other debts such as a car or personal loan.
- Unstable or insecure employment: Some lenders will not accept applicants who are on a short-term contract but would prefer those with more secure employment.
- The lender may also decline your application if they find that you have changed job, moved house, or taken on any other major change in your finances since the initial mortgage agreement.
- Non-compliance to the lender’s criteria: Each lender has its own set of rules and regulations, which you must comply with in order to be accepted for a mortgage product transfer. If your application does not meet these criteria, your application may be declined.
They want to make sure that you can afford the product transfer and will be able to keep up with payments in the future.
What Happens If My Product Transfer Mortgage Application is Declined?
If your application for a product transfer mortgage has been declined, it is important to understand why. Most of the time, lenders will provide you with feedback on the reasons for their decision, and you can use this information to determine how to proceed further.
Depending on the situation, it is important to remember that even if you have been refused a product transfer mortgage, there are other options available.
You may consider applying with another lender or you can speak to an independent financial adviser and take personalised advice for your specific circumstances and explore different alternatives.
How to Improve Chances of Approval
If you want to improve your chances of getting approved for a product transfer mortgage, it’s important to make sure that you remain in good financial standing.
Moreover, avoid taking on any additional debt or making major changes in your life. It is important to stay up-to-date with all your payments and ensure that all your bills are paid on time.
You should also see to it that you provide accurate information on your application, as any errors or omissions could lead to rejection.
Finally, a good credit score and clean credit history is essential to give yourself the best chance of being accepted for a product transfer mortgage.
By following these tips and ensuring that you meet all lenders’ requirements and criteria, you can improve your chances of getting accepted for a product transfer mortgage.
Summary
While a product transfer mortgage can be a straightforward option for existing borrowers, it is essential to recognize the potential for declination. Changes in financial circumstances, credit scores, lender criteria, and property values can all play a role in a lender’s decision-making process.
However, being aware of these factors and taking proactive steps to improve one’s financial standing can increase the likelihood of a successful product transfer mortgage application.