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If you stay with your current lender and switch to a new deal for the same amount, known as a product transfer, you will often face fewer checks than with a full remortgage. Where you are not borrowing more, FCA rules allow lenders to switch existing customers without a full affordability assessment. Some lenders may run a soft credit check for a like-for-like switch and some may not search your credit file at all. Practice varies from lender to lender.
Borrowing more, or changing your mortgage in other ways, is different. A further advance, or a change such as extending your term, usually means a fuller assessment of your income and outgoings, and often a hard credit search. Moving to a new lender usually involves a hard search, an affordability assessment and a valuation.
Product transfer, further advance or remortgage: what is the difference?
These three terms are often mixed up, but lenders handle them quite differently.
- A product transfer is a new deal with your existing lender for the same amount. It is not a new mortgage, just a new product on your existing one.
- A further advance is extra borrowing from your existing lender on top of what you already owe.
- A remortgage usually means moving your mortgage to a new lender, which pays off your current one.
| Product transfer | Further advance | Remortgage to a new lender | |
|---|---|---|---|
| Who with | Your current lender | Your current lender | A different lender |
| Borrowing more? | No | Yes | Sometimes |
| Affordability assessment | Not required under FCA rules where you are not borrowing more | Usually yes | Yes |
| Credit search | Often a soft search or none, depending on the lender | Often a hard search | Usually a hard search |
| Valuation | Often not needed | Often needed | Usually needed |
| Legal work | Usually none | Sometimes | Usually yes, sometimes as a free legal package |
The table shows a general pattern, not fixed rules. Each lender decides its own process, and it can change over time.
What FCA rules say about switching with your current lender
The relevant rule is in the FCA’s mortgage conduct rules, MCOB 11.6.3R. In broad terms, where an existing customer switches to a new deal, is not borrowing more (other than to cover a product or arrangement fee) and is not changing the mortgage in a way likely to be material to affordability, the lender does not have to carry out a full affordability assessment.
This matters if your credit history has taken a knock since you took out your mortgage. A new lender would look closely at any missed payments, defaults or other adverse credit. Your current lender may be able to offer you a new deal without reassessing you in the same way.
There are limits to this:
- The rule allows lenders to switch you without a full affordability assessment. It does not mean every customer will be offered a new deal.
- A lender can still decide what it offers someone who is in arrears.
- Borrowing more usually means a fuller assessment. Other changes, such as extending the term or adding or removing a borrower, may also lead to one, depending on the lender.
Soft searches and hard searches: what other lenders can see
The type of search matters more than the fact that a search happens.
| Soft search | Hard search | |
|---|---|---|
| Typically used for | Eligibility checks, checking your own file, some product transfers | Credit applications, including most remortgage applications |
| Visible to other lenders | No | Yes |
| Visible to you on your credit report | Yes | Yes |
| Effect on later applications | None | Several in a short period may be viewed with caution by some lenders |
Before any lender or adviser checks your file, ask which kind of search they will run. You can see what has been recorded by checking your statutory credit report, which is free from each of the three main agencies: Experian, Equifax and TransUnion.
Lenders do not see the score shown in a credit app. They see your report and apply their own scoring and criteria, which our page on remortgaging with a low credit score explains.
Can you get a product transfer with arrears or recent missed payments?
Possibly, but it depends on your lender. Because a like-for-like product transfer does not need a full affordability assessment, missed payments on other credit may matter less than they would to a new lender.
Arrears on the mortgage itself are different. A lender can decide what it offers a customer who is behind. Some may want the account brought up to date first, and some may offer a new deal as part of an arrangement to help you.
If you are behind now, talk to your lender early. Lenders must treat struggling borrowers fairly and consider options such as a payment arrangement. Free, impartial help is available from MoneyHelper, StepChange and National Debtline. Our guide to remortgaging with mortgage arrears and our page on mortgage arrears go into more depth.
Does it matter which lender you are with?
People often search for a particular bank or building society’s approach to remortgaging with bad credit. We do not describe individual lenders’ criteria, because each one sets its own and can change them at any time.
The general pattern in this guide applies widely, but the only reliable answer for your mortgage comes from your lender, or from an adviser who can compare its offer with the wider market.
When is it still worth comparing other lenders?
A product transfer is often the simplest option, but it is not automatically the right one. It can be worth looking further when:
- You want to borrow more. If your lender declines a further advance or offers less than you need, other lenders, including specialist lenders, may consider an application. If the extra is to clear debts, read about debt consolidation remortgages first, as the debts become secured on your home.
- Your credit history has improved. Most negative entries drop off your credit file after 6 years, and older issues often carry less weight. A CCJ or default that has aged may widen your options.
- Your LTV has fallen. Repayments and rising prices can move you into a lower loan to value band. Our guide on how LTV affects a bad credit remortgage explains why that matters.
- Your lender’s range is limited, or it does not offer you a new deal at all.
Moving lender usually means a hard search, a valuation, legal work and possibly product or broker fees, so compare the full cost rather than the headline deal alone.
A checklist before your deal ends
- Find your deal end date and any early repayment charge on your mortgage offer or annual statement.
- Note when you can arrange a new deal. Many lenders allow this a few months ahead, often 3 to 6 months, depending on the lender.
- Get your free statutory credit report from each agency and ask for any errors to be corrected.
- Check you are on the electoral register at your address.
- Ask your lender which product transfer deals it can offer you, and whether it will search your credit file.
- Decide whether you need to borrow more, as this changes the checks involved.
- Avoid unnecessary credit applications in the months before you apply.
- Compare your lender’s offer with what may be available elsewhere. Our bad credit remortgage calculator can help you get a rough idea of your numbers.
If nothing is arranged by the end date, your mortgage will usually move to the lender’s standard variable rate (SVR), which is usually higher.
Frequently asked questions
Does a product transfer involve a credit check?
It depends on the lender. Where you are not borrowing more, FCA rules allow lenders to switch existing customers to a new deal without a full affordability assessment. Some lenders may run a soft search, which other lenders cannot see, and some may not search your file at all for a like-for-like switch. Ask your lender before you agree. See remortgaging with a low credit score.
Will a further advance from my current lender need a hard search?
Often, yes. A further advance is new borrowing, so lenders usually assess your income and outgoings and commonly run a hard search, which other lenders can see. They may also want a new valuation. If the extra borrowing is to clear other debts, read about debt consolidation remortgages first, as those debts become secured on your home.
Can my lender refuse me a product transfer?
It can. The FCA rule allows lenders to switch existing customers without a full affordability assessment, but that does not mean every customer will be offered a new deal. A lender can still decide what it offers someone in arrears, for example. If you are behind on payments, read can you remortgage with mortgage arrears and speak to your lender early.
Can other lenders see that I checked my eligibility?
Not if it was a soft search. Soft searches, such as eligibility checks and checking your own credit file, are visible only to you. Hard searches for credit applications are visible to other lenders. You can see what has been recorded on your free statutory credit report from each agency. Our guide to what adverse credit is explains what else lenders look at.
Should I stay with my current lender if I have bad credit?
A product transfer is often simpler, and it can help people whose credit history has changed since they took out their mortgage. It may not be the only option to look at if you want to borrow more, your credit has improved or your LTV has fallen, as other lenders may then consider you. Comparing both is sensible. Our bad credit remortgage page gives an overview.