Product transfer vs remortgage — worked EXAMPLE

A lower headline rate is not automatically the cheaper path. On a remortgage versus a product transfer, the swing factors are usually the early repayment charge (ERC), the fee stack to switch lender, and any cashback — then the interest difference over a fixed horizon. Start there. Only after those sterling figures are on the page does a 0.25 percentage-point rate gap deserve attention.

This guide holds the house constant and puts both paths in two columns. Every rate that is not a live market price is labelled EXAMPLE. The figures come from our shared site case and match the worked numbers used elsewhere on Remortgage Lab. They are illustrative only. Your balance, rates, fees and ERC will differ.

Fees and ERCs decide — start there

Before rate-hunting, open the current mortgage offer or Key Facts Illustration and write down:

• whether an ERC still applies, how it is calculated, and when it ends
• any exit or admin fee on full redemption
• product, valuation, legal and broker fees on a new-lender deal
• any transfer or booking fee on a retention product
• cashback, and whether conditions or clawback attach
• whether fees are paid upfront or added to the loan

Those items set the floor. A new-lender rate that looks a fraction cheaper can lose once switching costs sit beside it — and it can lose badly if you leave while an ERC still applies. Independent consumer material from MoneyHelper stresses checking costs and comparing retention options with other products before you switch. The Financial Conduct Authority (FCA) publishes consumer guidance on mortgages and on arranging a new deal so it can start when the existing one ends. Those sources explain process and protections. They are not a substitute for your own lender documents.

The EXAMPLE house (same inputs both columns)

Here is the shared EXAMPLE case. Hold these inputs constant while you read the two columns below.

• Outstanding balance: £185,000
• Remaining term: 22 years
• Current fixed rate: EXAMPLE 4.19% (4 months left on the deal)
• Product transfer rate: EXAMPLE 4.39%
• New-lender remortgage rate: EXAMPLE 4.14%
• Fees to switch lender: £1,499 (EXAMPLE product fee £999 + legal £500)
• Cashback on the remortgage path: £250
• EXAMPLE ERC if you left early at 2% of balance: £3,700
• Transfer fee in this EXAMPLE: £0
• Comparison horizon: 24 months

On a capital-and-interest repayment basis, holding balance and term constant for a simple comparison, the monthly repayments work out as:

• Monthly at EXAMPLE 4.39% (product transfer): about £1,094
• Monthly at EXAMPLE 4.14% (new lender): about £1,069

The remortgage monthly payment looks about £25 lower. That is not the full story. Over 24 months the interest totals diverge by more than the raw payment gap, and fees or an ERC can erase the apparent saving entirely.

Two-column comparison over 24 months

The table below puts the same EXAMPLE house on both sides. Interest figures assume the stated product rate applies for the full 24-month horizon (a simplification for illustration). Net fee rows show the remortgage path both without an ERC (for example because completion waits until the charge ends) and with the EXAMPLE 2% ERC still applying.

All rates and the 2% ERC are EXAMPLE figures for illustration — not live market prices and not a quote.

Reading the net-cost rows

Interest alone favours the remortgage column by roughly £913 over 24 months (~£15,810 on the transfer path versus ~£14,897 on the new-lender path). That is the rate gap doing its work.

Once you add net switching cost after £250 cashback — and assume the ERC no longer applies — the remortgage path carries £1,249 of fees. Approximate net cost of interest plus net fees becomes about £15,810 on the transfer path versus about £16,146 on the remortgage path. The gap is roughly £336 favouring the EXAMPLE product transfer over this 24-month horizon. Fees decide the story before the 0.25 percentage-point rate difference does.

If instead you left early while the EXAMPLE 2% ERC still applied, the remortgage column adds about £3,700. Net fees after cashback rise to around £4,949. Net cost of interest plus fees plus ERC is then about £19,846 versus about £15,810 on the transfer path — a gap of roughly £4,000 favouring the EXAMPLE product transfer. The ERC swamps the interest saving.

Important: these are EXAMPLE figures for illustration. They are not live market rates, not your lender’s quote, and not a recommendation to stay or switch. Change the balance, rates, fees, cashback or horizon and the lean can reverse. A longer horizon, a larger rate gap, fee-free switching, or a much stronger new-lender package can flip the arithmetic. Use your own offer and redemption statement.

What the columns leave out

Sterling totals are necessary but not sufficient. A full remortgage re-underwrites income, credit and affordability. A product transfer may still be available when a new-lender path would not. Timing near a deal end date matters: a transfer booked in writing can reduce the risk of drifting onto a standard variable rate while conveyancing slips, while a remortgage that starts early enough can also avoid that gap. Soft factors — offset, portability, overpayment limits, or simply preferring one lender relationship — belong on the decision list alongside the table.

Valuation freezes, legal delays and cashback conditions can also move the remortgage column. None of those appear as neat rows above. Treat the table as a cost skeleton, then layer process and criteria on top.

How to reuse the EXAMPLE with your own numbers

Keep the same shape: one house, two columns, one horizon. Replace every EXAMPLE rate and fee with figures from your retention quote and any new-lender illustration. Confirm the ERC method and end date from the offer wording. Then compare interest plus net fees (minus cashback) with and without the ERC, over the same number of months.

Our Remortgage vs product transfer calculator and Remortgage true cost calculator use the same EXAMPLE starters so you can edit the inputs. Neither tool is advice. Both exist so you can see the arithmetic before you speak to a lender or an adviser.

Sources and further reading

We write in our own words. For independent consumer guidance, see MoneyHelper on remortgaging and the FCA’s consumer mortgages pages. Those pages explain process and context. They are not a substitute for reading your own lender documents.

Disclaimer

This guide and the worked EXAMPLE are illustrative only. They are not personalised financial advice. They are not a credit or mortgage offer. They are not an FCA-regulated recommendation. Check your lender offer (and Key Facts Illustration) for ERC, fees and product terms. Rates and charges change. Availability of product transfers is lender-specific and not guaranteed. If you want advice on your situation, speak to an FCA-authorised mortgage adviser.

Next steps

Put your own figures through the Remortgage vs product transfer calculator and the Remortgage true cost calculator. Read your current offer, any retention quote, and any new-lender illustration carefully. If you want regulated advice on which path fits your circumstances, consider an FCA-authorised adviser. This site helps you organise the numbers; the decision is yours.