Virgin Money Customers Upset Over Nationwide’s Superior Mortgage Offers
Are Virgin Money Borrowers Feeling Left Behind?
Some Virgin Money customers are voicing their frustrations as they discover that Nationwide, their parent company, is rolling out more appealing mortgage deals. Despite the merger last autumn, it seems Virgin’s mortgage holders feel like second-class citizens in this newly established financial family.
The Discrepancy in Mortgage Deals
Upon examining the current offerings, it’s evident that a Virgin Money customer aiming for a new mortgage can end up paying nearly £1,000 more than a Nationwide customer for comparable interest rates. This disparity has sparked discontent among borrowers who expected more equitable treatment following the merger.
Understanding the Brand Separation
Though Nationwide acquired Virgin Money, the two brands continue to operate independently, leading to a complex situation for customers wishing to switch between the two. A mortgage broker shed light on this typical industry practice: borrowers cannot seamlessly transition from one brand to another within the same group. Instead, they must navigate the intricacies of remortgaging, incurring potential legal and valuation costs in the process.
The Big Picture: Upcoming Expiry of Fixed-Rate Deals
Across the UK, approximately 1.6 million fixed-rate mortgage deals are set to expire by 2025, leaving many homeowners anxious about potential increases in payments. Typically, lenders reach out to borrowers nearing the end of their deals, presenting a range of new rates. However, the Nationwide acquisition raised expectations for Virgin Money customers, who are now questioning their options.
Notable Financial Movements Post-Acquisition
Since the acquisition, Nationwide has revealed that its purchase of Virgin Money resulted in a remarkable £2.3 billion gain. This lucrative deal allowed Nationwide to distribute £50 mini-windfalls to over 12 million members, resulting in a total of over £600 million returning to its customer base.
The Clashing Mortgage Offers
In a specific case shared by a Virgin customer nearing the end of her two-year fixed mortgage at 4.54%, the lowest product transfer rate available was a two-year fix at 3.84%. However, this came with a hefty product fee of £1,995.
On the other hand, Nationwide offered the same 3.84% rate for existing borrowers, but at a reduced fee of only £999—a saving of nearly £1,000.
Key Comparisons Between Offers
Virgin Money’s tracker deals include:
- A two-year fixed at 4.48% with a £995 fee.
- Nationwide’s tracker deals provide:
- A two-year tracker at 4.39% with a £999 fee.
Nationwide‘s version carries no early repayment charges, a significant advantage over Virgin’s. However, Virgin does allow customers to switch to a fixed-rate mortgage without a penalty.
Nationwide’s Response
A Nationwide spokesperson stated, "Nationwide Building Society and Virgin Money continue to operate as separate lenders following the acquisition and are being integrated over time." This means that customers wishing to switch providers must go through the remortgage process.
Industry Insight: Are the Deals Worth It?
David Hollingworth from L&C Mortgages notes that it’s fairly standard for borrowers to face brand-specific mortgage terms. For instance, Lloyds and Halifax face similar brand separation issues despite being under the same umbrella.
When asked whether Nationwide consistently offers better deals than Virgin, he provided perspective: "It moves around, and both are generally competitive."
Conclusion: A Call for Fairness
With increasing awareness among Virgin Money customers regarding the price disparity, there’s a growing call for fairness within the financial landscape. For those feeling stuck, it is crucial to stay informed about available options, rates, and the intricacies involved in remortgaging.
For further guidance on mortgage options, check out credible mortgage advice articles on resources like The Guardian and MoneySavingExpert.
Engaging with your financial institution is vital: understand your rights and explore all available options to ensure you secure the best possible deal. Don’t be left in the dark as the mortgage landscape evolves!
