5 Year Fixed Mortgage with only 2 Year Early repayment charge

Virgin Money Switch & Fix – Available through Intermediaries only, like Niche Advice a great 5 Year Fixed Mortgage with only 2 Year Early repayment charge

In this article, I review Virgin Money’s Fix and Switch residential mortgage, which is open to first-time buyers, existing buyers, and remortgages, offering a 5-year fix with the main early repayment charge applied only to the first 2 years. Determine if this is the right fit for you.

Why has this product come about?

Virgin says it’s a nudge that mortgage applicants seek long-term security of rates, but are also conscious of the current market sentiment that rates are set to fall. So it tackles both wants.

Let’s break it down.

What is the Fix and Switch Mortgage?

Virgin Money’s Fix and Switch is a 5 Year Fixed Mortgage with only 2 Year Early repayment charge instead of the full five.

That means:

• Your rate is fixed for 5 years, giving you monthly payment certainty
• You can leave the deal after 2 years (via a remortgage, sale, or switch to another V) without penalty
• It’s an intermediary exclusive, which means it’s only available through professional Mortgage Brokers, like Niche Advice.

How do the Fix and Switch Mortgage rates compare against standard 2 and 5 year fixes?
The table below compares the lowest intermediary mortgage products on the market.

ERC = early repayment charge.
APR based on a first time buyer. Purchasing at £300,000 in England. No product fee. Capital & Interest Repayment mortgage over 25 years. Energy performance rating C or less. Rates as at 23/4/25 source Twenty7tec.

5 year fixed rate mortgage with a 2 year early repayment charge Reviewed

• In terms of planning, if you are sure when to break the mortgage, then as you can see from the table above, rates are cheaper for set two or five-year fixed periods, so this would not be the product for you, as you are paying a premium for the flexibility the Fix and Switch offers.
• If you want to change your plans in years 3 and 4 potentially then this does in theory give you the security but you could also take a decision after a 2 year fixed rate whether to go for a further fix rate at that point. With rates generally expected to fall, although not guaranteed, this new fix on the open market could be at a cheaper rate than the Virgin Product Transfer option.
• Why could your plans change?
  – Well, for instance, you might be buying this property as a stepping stone to move up the property ladder, and you aspire to do this in a shorter time frame. You realise that this might not be possible, as it relies on your circumstances improving.
  – You might enter this purchase transaction to convert the residential property into a buy-to-let and want to ensure the timing is right.
  – It could be that you are first time buyer I’m want the security of a five year fixed rate to allow you to acclimatise to being a homeowner for the first time and understand better how to budget your finances home, and once inside the fixed, when you feel comfortable perhaps a cheaper shorter term fix might suit you better.
• Economic predictions do not always come true and if you are risk averse by nature a longer term fix right my help you sleep better at night. There are certainly rumblings that inflation is under global pressure, and historically, this leads to interest rate pressures.
• Like a lot of mainstream lenders, Virgin Money can potentially lend more on 5-year fixed rates, so even if you were going into the transaction with two years on your horizon for change, maybe the additional borrowing might allow you to purchase a property of a higher denomination. It would, however, probably need to come down to whether Virgin’s lending policy is the most appropriate for you, as even with this five-year fix affordability enhancement, from my experience, their affordability calculation is not the best on the market.
• This particular product the Switch and Fix is limited to the intermediary market only this is because is it complex in design I’m really needs a conversation around its suitability I know I suspect Virgin Money has taken the decision that’s this sits more comfortably with professional Mortgage Brokers such a Niche Advice, in other words it is not available to consumers directly.

Conclusion on the Virgin 5 Year Fixed Mortgage with only 2 Year Early repayment charge
Virgin Money has identified a need, but this product is certainly not for everyone. It’s a clever way to try and address their funding costs and make the product attractive as I suspect a 5 year fix without an early repayment charge at any point would be a much easier sell and entice more customers but it simply would be at too higher price – so this is a “happy” compromise – but a compromise nevertheless, but could be exactly what you are looking for!

More information on this product can be found on the Virgin PLC website Virgin Money Switch & Fix

Author: Payam Azadi

Payam Azadi is a partner at Niche Advice who are whole of the market Independent Mortgage Brokers. His role is very much focused on Property financing both on residential and commercial lines. To get in contact with him please click here.

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