Some customers of Virgin Money are expressing discontent over the disparity in mortgage offers compared to national borrowers, even though both belong to the same corporate family. Following Virgin Money’s acquisition by Nationwide last fall, the two brands still function separately. Some Virgin mortgage holders feel like they’re at a disadvantage when trying to secure a new deal.
Current Virgin customers looking to refinance this week might face nearly £1,000 extra compared to their national counterparts to secure the same interest rate, which seems odd considering they are part of the same organization.
A mortgage broker pointed out that typically, borrowers can’t seamlessly switch between brands under the same parent company.
With around 1.6 million fixed-rate mortgages set to expire in 2025 across the UK, many are anxious about potentially higher payments when exploring new options.
When a mortgage reaches its end date, lenders generally propose a new option for their clients.
Nationwide finalized its purchase of Virgin Money in October and reportedly made £2.3 billion from the deal, essentially acquiring the brand at a discount.
This acquisition led to Nationwide distributing mini windfalls last month, with over 12 million members receiving £50 each, totaling over £600 million.
Despite this merger, Virgin and Nationwide continue to operate as distinct lenders, each offering varying mortgage deals to their customers.
If a borrower’s current contract concludes, transitioning between the two brands isn’t straightforward; it involves a lengthy reapplication process along with various legal and valuation fees.
Recently, Virgin Money customers with a two-year fixed rate of 4.54% that ends on July 31st reached out. The best product transfer rate available to one customer is a new two-year option at 3.84%. While it’s a competitive rate given her loan-to-value ratio, this product has a high fee of £1,995.
She, as a client of a national group, noted that the same group offers a two-year option at 3.84% too, but with a significantly lower product fee of nearly £1,000 less at £999.
Additionally, Virgin has introduced base rate tracker options at 4.48%, but with a four-year term and a fee of £995. Conversely, a national tracker with a lower rate of 4.39% carries the same product fee.
One advantage for national borrowers is the absence of early repayment fees, which is something Virgin charges for its two-year rates. Yet, Virgin does permit customers to switch from a tracker to a fixed fee without incurring penalties.
A spokesperson from Nationwide commented that clients wishing to change providers generally have to go through a certain protocol, which is standard practice.
According to David Hollingworth from L&C Mortgages, it’s typical for borrowers to be unable to switch between brands, even within the same banking group—citing Lloyds and Halifax as an example. Each operates under distinct pricing structures.
As for which offers better deals, Hollingworth noted that it varies, with both Virgin and Nationwide being relatively competitive, making either a viable option.”
