Remortgaging after self-employment or a credit dip changes your circumstances

Your fixed rate is ending, your circumstances have changed, and the question is not whether you can get a new deal but which route is open. There are two: a product transfer with your existing lender, which normally involves no new affordability assessment, and a full remortgage to a new lender, which means a complete application with income checks. Knowing which to use, and in which order, is most of the game. This is general information rather than financial advice.

The product transfer safety net

A product transfer moves you onto a new rate with your current lender without changing the loan amount or the term. Because the lender's risk does not increase, MoneyHelper's remortgaging guidance points to product transfers that do not require an affordability assessment as the route for borrowers a new lender might refuse. There is no legal work either, since the lender does not change, so the switch can be done in days.

The limits are the mirror image. You choose only from your own lender's range, you usually cannot borrow more, and the pricing beats the standard variable rate comfortably without necessarily beating the market.

Self-employed: What lenders actually ask for

Most lenders want at least two years of accounts or SA302 tax calculations before lending to a self-employed applicant, though a smaller number of specialist lenders will consider one year of trading if the business is clearly profitable. That turns your options into a timeline. Under a year of trading, the product transfer is realistically the route. Between one and two years, a limited but real set of lenders will consider you, and a whole-of-market broker earns their fee finding them. Past two years of steady figures, the full market reopens.

Company directors should also know that lenders read the same business two ways: some assess salary plus dividends, others use your share of net profit. On a business that retains profit, the difference in borrowing power can be substantial, which is a second reason to use a broker rather than applying cold.

Credit dips: recent marks weigh most

Missed payments and defaults narrow the lender list rather than closing it, and recent marks count against you far more than old ones. Check your file with the credit reference agencies before any lender does, and fix what can be fixed: errors, unlinked addresses, a missed payment a lender might remove as a goodwill gesture. Do not stack applications either, because each full application leaves a hard search on your file and a cluster of them reads as distress. Our separate article on credit reports when moving house covers the clean-up in detail.

Reserve the backstop, then shop

The sequence that works is to reserve first and shop second. Most lenders let you book a new deal several months before your current rate ends, and usually let you swap to a different one if you find better before it starts. Reserving a product transfer costs nothing, protects you from rolling onto the standard variable rate, and buys time to test the open market from a position of safety.

The money at stake is not small. On a £180,000 balance, sitting on a standard variable rate 2.5 percentage points above an available product transfer costs about £4,500 a year in extra interest, or £375 a month. Those are illustrative rates rather than today's prices, but the gap between doing nothing and taking the transfer is routinely of that order.

A full remortgage to a new lender needs a solicitor, while a product transfer does not, and our article on whether you need a conveyancer to remortgage explains why. If you do go the full route, you can compare remortgage conveyancing quotes alongside the mortgage itself.