Virgin Money Introduces Fix and Switch Mortgage Offering

by | Tuesday 30th Jan 2024 | Mortgage News

In a response to the increasing uncertainty surrounding mortgage rates, Virgin Money has unveiled an innovative Fix and Switch mortgage offering, designed to provide customers with a unique combination of stability and flexibility in a challenging mortgage market. In a communication sent out to brokers at Oportfolio Mortgages today, Virgin highlighted the features of the new offering.

What is Fix and Switch Mortgage?

The Fix and Switch mortgage is a five-year fixed-rate offering, but what sets it apart is the two-year Early Repayment Charge (ERC). During the first two years, customers benefit from a fixed interest rate, providing them with certainty and protection against potential rate hikes. However, after the initial two years, there is no ERC, allowing borrowers to explore other deals if interest rates decline. Virgin Money is currently the sole provider offering a five-year fixed-rate mortgage with a two-year ERC. This distinctive feature provides customers with an opportunity to secure a longer-term fixed rate while retaining the flexibility to adapt to changing market conditions. As an affiliated mortgage broker, Oportfolio has exclusive access to this deal from Virgin, and we can’t wait to start helping our clients to secure a new mortgage on this basis!

Key Features of Fix and Switch

  1. Five-Year Fixed Rate: Customers enjoy a stable interest rate and predictable monthly payments for five years.
  2. Two-Year Early Repayment Charge (ERC): During the initial two years, a 1.5% ERC is applicable. However, after this period, customers can switch to another deal without incurring any ERC.
  3. Reversion to Standard Variable Rate (SVR): At the end of the five-year fixed-rate period, the mortgage reverts to Virgin Money’s Standard Variable Rate, currently at 9.49%.
  4. Affordability Assessment: The affordability assessment for Fix and Switch is based on a five-year deal, providing clarity and consistency in the evaluation process.
  5. Flexibility for Product Transfer: If customers choose to arrange a product transfer with Virgin Money after the two-year ERC expires, a procuration fee will be payable.

New Residential Purchase Products for Intermediaries (Like Oportfolio)

  • 85% LTV Fix and Switch 5 Year Fixed Rate: 5.14% with £500 cashback.
  • 90% LTV Fix and Switch 5 Year Fixed Rate: 5.27% with £500 cashback.

These offerings are aimed at providing intermediaries and their clients with competitive options tailored to their specific needs. However, there are some customers that these new products would be right for, and some that would definitely not be right. Which is why it is so important to speak with a mortgage broker before choosing a new mortgage product.

Fix and Switch may suit customers who:

  1. Are considering a five-year fixed-rate mortgage but want the option to switch to another deal after two years if interest rates decrease.
  2. Are considering a two-year fixed-rate mortgage as it offers an additional three years at the same initial fixed rate.

Fix and Switch may not suit customers who:

  1. Do not foresee the possibility of lower rates in two years and prefer a standard five-year fixed-rate mortgage.
  2. Are certain that mortgage rates will be lower in two years, as they may prefer a standard two-year fixed-rate mortgage.

Speak To a Mortgage Broker in 2024

With Fix and Switch, Virgin Money aims to empower customers with a mortgage solution that aligns with their financial goals while navigating the uncertainties in the current market. The best way to make the most of this new products and other intermediary exclusive products is to speak with a professional mortgage broker. Give our team at Oportfolio a call today to arrange a fee free initial mortgage consultation with one of our experts. We are here to help.

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