MRT2 · Mortgage Products and Post Completion
MRT2 LO2 covers what happens to a mortgage after completion: moving it to a new lender, taking it to a new home, switching products, adding or removing a borrower, overpaying and paying it off early. The exam tests whether you know when MCOB 11.6 affordability is switched off and when it comes back, what an ERC may and may not be, and the arithmetic advisers do every day: ERCs above an overpayment allowance, blended rates on a port with extra borrowing, redemption figures and SDLT on a transfer of equity.
8 min read5 sections
Checked against: Walbrook (formerly LIBF) CeMAP spec v14, Appendix 4, MRT2 LO2 (AC2.1-2.7); FCA Handbook MCOB 11.6, 11.9, 4.8A, 7.6 and 12.3; FCA PS25/11; HMRC SDLT transfer of ownership guidance and residential rates from 1 Apr 2025 (gov.uk), checked 11 Oct 2026. Independent prep, not endorsed by Walbrook (formerly LIBF).
MCOB 11.6.2R requires an affordability assessment before a lender enters into or varies a regulated mortgage contract. MCOB 11.6.3R switches it off for a replacement or variation with the same lender (or a closed-book lender's group lender) where the customer borrows nothing beyond the balance, other than to pay a product or arrangement fee, and nothing changes that is likely to be material to affordability. A new lender gets no such exception, although it may use the modified assessment in MCOB 11.9.
| Change with the same lender | Full MCOB 11.6.2R assessment? | Rule |
|---|---|---|
| New rate, no extra borrowing, fee added | No | MCOB 11.6.3R |
| Term reduction (since 22 Jul 2025) | No, but consider affordability under the Consumer Duty | MCOB 11.6.3R, PS25/11 |
| Switch repayment to interest-only | Yes, plus a credible repayment strategy | MCOB 11.6.4E, 11.6.41R |
| Term extension into retirement | Yes, including retirement income | MCOB 11.6.4E |
| Add or remove a party | Yes | MCOB 11.6.4E |
Every note. Every question. One pass.
3 more sections of this note are part of Premium.
From ≈£2.72/mo on the Until-you-qualify pass (18 months)
| Any additional borrowing, including on a port | Yes, on the whole debt | MCOB 11.6.2R |
Execution-only: a variation with no extra borrowing can proceed outside the MCOB 4.8A.7R bars, but on a rate change the firm must present every product it offers for which the customer is eligible (MCOB 4.8A.10R). Before the application the customer gets an illustration or ESIS (MCOB 7.6.18R).
Trap: Treating an added product fee as extra borrowing. Fees financed into the loan are carved out of both MCOB 11.6.3R and MCOB 4.8A.10R.
Takeaway: Same lender, no extra money, nothing material changed: no full assessment. Change the repayment type, retirement term or borrowers and it comes back.
Moving to a new lender is a remortgage. The outgoing lender may charge an ERC during the product's ERC period and an exit fee; the new lender may charge a product fee and valuation and legal costs unless it pays them as an incentive. There is no SDLT, because ownership does not change. The new lender assesses affordability under MCOB 11.6.2R, or under MCOB 11.9 where there is no extra borrowing, the same property, no shortfall in 12 months and a more affordable deal. Execution-only needs the customer to specify the lender, rate and rate type, property value, term, amount and repayment method (MCOB 4.8A.14R).
Moving home gives three choices: port the product, redeem it and pay any ERC, or ask the lender to refund the ERC if a new mortgage completes within its stated window. Porting carries the rate, end date and ERC terms to the new property; it is not guaranteed, because the lender rechecks the property and the borrower against its criteria at the time.
Trap: Applying the same-lender exception to a switch to a new lender, or assuming a portable product must be ported to any property.
Takeaway: New lender means fresh affordability or MCOB 11.9. Porting keeps rate, end date and ERC, but only if the lender accepts the move.
