Following on from my earlier thread about remortgaging mid renovation. The existing lender has offered a product transfer at 5.52% on a two year fix. No valuation, no legal fees, can be done in about a week.
Broker says they can get 5.18% on a two year fix from a different lender but that needs a full application, valuation, solicitor, the lot. Probably six to eight weeks. And the valuation is the risk given the state of the kitchen.
So the question is whether the 0.34% saving justifies the hassle and the risk. On roughly £140k outstanding thats about £40 a month. Over two years thats just under a grand. Not nothing. But if the valuation comes in low or the surveyor flags the renovation works I could end up stuck.
Feels like the lender knows exactly what they’re doing. Offer something slightly worse than the market but make it frictionless. Anyone taken the product transfer and regretted it? Or gone the other way and wished they hadnt?
Take the product transfer. A grand over two years is nothing if the valuation torpedoes the remortgage and you end up on SVR at 7% while you sort it out. The lender isnt being clever, theyre just offering a path of least resistance. Sometimes thats the right path.
@rb471956 I hear you on the risk but this is exactly the mindset they’re banking on. “Take the safe option, don’t rock the boat, a grand is nothing.” A grand is a grand. Over five properties thats five grand. Over ten years thats tens of thousands in aggregate overpayment because nobody bothered to push back.
The valuation concern is real but I’ve spoken to the broker again and he reckons the work done so far would actually lift the value, not lower it. New kitchen, rewired, new consumer unit. The lender’s concern would be if the property was mid-demolition, not mid-improvement.
The real question is whether the remortgage market will have moved by the time I need to lock in. Rightmove tracker has two year fixes drifting down from 5.42 to 5.18 in a month. If that trend holds even slightly I could be looking at sub-5 by July. Product transfer locks me in now at 5.52 with no ability to renegotiate.
“If that trend holds” is doing a lot of heavy lifting there. BoE held at 3.75 last month and one member voted to increase. You could just as easily be looking at 5.5 in July. The broker gets paid if you remortgage. He doesnt get paid if you take the product transfer. Draw your own conclusions about whose interest hes serving.
Interesting debate this.. I was in almost exactly this position on one of my Blyth properties last autumn and took the product transfer at 5.38% because it was the path of least resistance. Three months later a broker found me a remortgage deal at 4.89% on a different property with the same LTV. That difference over two years on a £95k balance works out at roughly £900.. so not massive, but it still stings.
The point about SVR risk is valid but I think it’s a bit of a bogeyman in practice?? If you’ve got a decent LTV and no nasty surprises on the valuation, most remortgage applications complete within 4-6 weeks. The real risk is if the renovation work has left the property in a state the surveyor doesn’t like, which is a fair concern for @CyclingChap47 given the mid-reno situation.
I’d say get a broker to run the numbers before committing either way. Product transfers are designed to be frictionless precisely because the lender wants you to stay put and not shop around. That should tell you something..
Cheers!