The brokerage industry has had its say on the potential pitfalls of product transfers, especially in the volatile market we’re seeing at present.

Darryl Dhoffer, mortgage, equity release and protection expert at The Mortgage Expert, said: “Apart from the issue that a broker will still undertake a full review of the whole market, to make sure it's suitable, a product transfer directly with a lender can easily be done.

“However, the lender will not notify the borrower if the rate reduces before the new deal starts, whereas a broker will, and change it to the lower rate.
“Brokers are always looking out for their clients, whereas lenders are always looking out for themselves.”

Kirsty Wells, director at Blueprint Mortgages and Protection, commented: “Some lenders make it very easy for customers to go direct and carry out a product switch online, sometimes with just a few clicks if the mortgage is linked to their online banking.

“Customers don't always weigh up the options and understand how to work out which product is more cost-effective over the fixed period, and many don't take into account any arrangement fees added [or] notice the early redemption penalty either.

“This then leaves customers in some instances needing to pay hefty early redemption penalties or paying large fees when that may not have been the best option for them.

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“Speaking to a mortgage broker and getting impartial advice is vital to weigh up the pros and cons of not only the product length, but also which lender is most suitable.”

Also sharing her opinion was Laura Bairstow, founder of Mortgage Masters: “Borrowers panicking about rising rates and choosing to product transfer with their current lender without consulting a broker, are potentially losing out on lower interest rates from alternative lenders and paying more than they need to. 

“I have seen clients fix a rate when they are already struggling to meet their current repayments, leaving them financially vulnerable when they switch to the higher rate.

“Had they been given proper advice, those clients would have been made aware of alternative options open to them such as extending the term of their mortgage to keep repayments down, or their current mortgage may no longer meet their requirements.

“For example, they may wish to have flexible features such as having the option of making overpayments or porting the loan to a new property.”

Lee Gathercole, co-founder of Rebus Financial Services, added: “The biggest pitfall is not really knowing whether a product transfer with your existing lender is the most cost-effective and best-suited mortgage option for you.

“Consulting with a broker on the other hand means you have peace of mind that you are getting a good deal and it's one that is tailored to your needs.

“Choosing to stay with your current lender could cost you thousands more in interest — I'd like to see mortgage lenders push their customers back to see their existing mortgage broker more.”