Clydesdale Bank Plc trading as Virgin Money · DRN-6032530

The complaint Mr T complains that he needed to move into a property which was subject to a Buy To Let mortgage with Clydesdale Bank Plc trading as Virgin Money. But he said Virgin wouldn’t let him change the mortgage to residential, and was now threatening to repossess the property. What happened Mr T told us he’d bought the mortgaged property to rent out, and had a Buy To Let (“BTL”) mortgage with Virgin. But he said that due to ongoing financial difficulty, he had moved back into the property in 2022. Mr T said he had skipped only a few payments in 2022 and 2023, due to these financial difficulties, but before that he had made all his payments on time. Mr T told us that his recent problems keeping up with payments happened because in 2024 his previous fixed interest rate deal expired, and he moved on to Virgin’s Standard Variable Rate (“SVR”). This meant his repayments greatly increased. Mr T said he had asked Virgin to change his mortgage from BTL to residential, but it wouldn’t let him switch due to arrears on the account. Mr T said those arrears were insignificant at the time, considering what he’d borrowed and what the property was actually worth. But those arrears were now growing, as Virgin was now continuing to charge a considerably higher interest rate. Mr T said his complaint was about Virgin’s lack of flexibility and compassion during a time of immense financial stress and difficulty. Mr T said he was very worried about losing his home, and he provided medical evidence of the effect this was having on him. Mr T then wrote to us again, and said Virgin now had an upcoming court date to repossess his property. Mr T told us he had made a number of proposals to Virgin, including renting his property to a previous tenant, who was ready to move in, or renting the property out for more lucrative short-term lets. But Mr T said Virgin had rejected his proposals, and still wouldn’t offer any flexibility in his circumstances. He said he had even proposed selling the property himself, but Virgin was pressing ahead with the hearing. Mr T said Virgin was ignoring the impact a repossession would have. It would leave him homeless, and forced to move away from his family. Mr T said the stress of this all meant he had needed acute medical intervention. Virgin said it was sorry about the situation that Mr T was in, but there was little it could do to support him. Virgin said Mr T’s BTL mortgage had two sub-accounts, and both of those had been in long term arrears since 2018 to 2019 onwards. That was well before Mr T’s fixed interest rate deal had ended. Virgin said no repayments were now being made. Virgin said although Mr T had a BTL mortgage, he had stopped renting the property out, instead Mr T was living in it himself. Virgin said it couldn’t change Mr T’s mortgage to a residential one while his mortgage was in arrears, and it didn’t think Mr T could afford a residential mortgage. Virgin said that the mortgage type, and Mr T’s financial situation, very severely limited what it could do to help.

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Virgin said it hadn’t rejected Mr T’s more recent proposals about how he might rent the property out, it said it hadn’t received any update on those plans. If Mr T did rent the property out, then it would ask him to complete a new income and expenditure assessment, and reconsider whether he could afford the mortgage. Unfortunately, Virgin said that at the moment, as things stood, Mr T wasn’t able to meet the payments on its lending to him. And Virgin said if it let things just continue as they were, that would just incur further arrears and use up any equity in the property. Virgin said it was sorry it hadn’t forwarded a copy of an earlier complaint response letter on to Mr T when he first asked, and it offered £50 to say sorry for that. But it didn’t think it had made any other mistakes. It agreed to put a hold on repossession proceedings while our service was considering this complaint, but not to stop those proceedings altogether. Our investigator didn’t think this complaint should be upheld. He said it was an important part of the background to this case, that Mr T had an unregulated BTL mortgage. So he had originally agreed to borrow the money from Virgin with a view to making a profit. Our investigator explained BTL mortgage agreements are commercial in nature, and that means there are fewer protections in place for when a borrower is struggling financially. Our investigator said he was sorry to hear about the circumstances which prompted Mr T’s move, and the impact this had on him, but moving into the property was a breach of the terms of this mortgage. Mr T had asked Virgin to change his mortgage to residential, but as he wanted to change the terms on which the borrowing was agreed, it wasn’t unfair for Virgin to treat the request as an application for a new residential mortgage. And unfortunately, as Mr T had been unemployed for some time, he wouldn’t pass those checks. So Mr T remained on a BTL mortgage. Our investigator explained why there would be limited options to support someone with a BTL mortgage, particularly when compared to a residential mortgage. He didn’t think Virgin had to offer Mr T a new fixed rate product, as that may not have been in his best interests overall, and given the rise in rates, was still unlikely to make the mortgage affordable for him. Our investigator said he understood why it was important to Mr T to remain in the property, but he said it looked like the unwelcome reality of the situation now was that the mortgage was unaffordable. Although Mr T thought Virgin was being inflexible, our investigator said Virgin’s approach reflected the limited range of options available based on the mortgage type, and that the mortgage has become unaffordable due to the difficult personal circumstances Mr T was facing. Our investigator didn’t think Virgin Money had acted unfairly by pursuing repossession action. Our investigator said it was fair for Virgin to offer £50 in compensation for not promptly resending its earlier complaint response letter. So he said he would ask Virgin to pay that. Mr T didn’t agree. He thought Virgin was confusing two separate issues here. He said it had offered to pay him £50 previously, for adding a service charge and ground rent to the mortgage, but his current complaint was about the bank’s lack of flexibility. He said it was wrong for Virgin to remain unwilling to accept different payment arrangements, despite his previous exemplary track record of payments, before things became difficult in 2022. Virgin commented on Mr T’s response, saying it was obliged to maintain its security over the property. Virgin pointed out it had also received charging orders over the property. And it confirmed that its offer on a previous complaint related to a delay in re-sending a complaint response letter.

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Virgin said it wouldn’t agree with Mr T’s description of the arrears history, it had previously told us that both accounts were in arrears and that problems on Mr T’s mortgage predated 2022. Virgin said Mr T was occupying the property in breach of the existing BTL mortgage and as he hadn’t made any repayments in over a year, unfortunately couldn’t afford a residential loan either. This case then came to me for a final decision. What I’ve decided – and why I’ve considered all the available evidence and arguments to decide what’s fair and reasonable in the circumstances of this complaint. I’ve reached the same overall conclusion on this complaint as our investigator. I have been very sorry to hear about the difficult situation that Mr T has found himself in over the last few years, and the impact this has had on his health and wellbeing. I have taken this into account in reaching my decision below. The core facts here do, unfortunately, paint a very difficult picture. Virgin has told us that the problems on Mr T’s mortgage do date from rather earlier than he suggested, but also they have worsened recently. As at the end of 2025, Mr T had made no repayments to either of his two mortgage sub-accounts for over a year. Mr T also appears to have three charging orders on his home, as well as mounting arrears. I appreciate that Mr T’s personal circumstances and ill-health have produced this outcome, but Mr T has told us that he has no earned income of his own, and as he’s living in the property at the moment, the rental income which used to pay the mortgage is no longer available to him. I know Mr T asked to change the mortgage type, but as our investigator said, a change to a residential mortgage is a substantial change to the lending Virgin has made to Mr T. And I don’t think it was unreasonable for Virgin to say it would not offer residential lending to Mr T, given his current circumstances. Virgin has explained why it has few options to support Mr T, and why it has reached the conclusion that it’s not in anyone’s interest to allow arrears to continue to accrue on Mr T’s mortgage. So it has chosen to begin proceedings to repossess the property. I think that is a reasonable step for Virgin to take here, and I don’t think it’s unfair that Virgin hasn’t offered a wider range of forbearance options, on a mortgage which was designed to form the basis of a business venture. Mr T had previously told us it was important to him to retain the property, which provides a home for his family, and that he fears losing contact with his offspring if he loses the property. But in a case where Mr T has no earned income of his own, and hasn’t been able to make a mortgage payment in over a year, it is difficult to see what other options Virgin would have, if Mr T stays in the property. It isn’t entirely clear, given Mr T’s most recent suggestions of renting out the property, whether he does still want to live in it, or whether he’d prefer to rent it out now, as a way of covering the mortgage and hopefully avoiding repossession. Mr T said all his proposals had been rejected by Virgin, but it doesn’t look to me as if Virgin is seeking to prevent Mr T from renting out this property if he wishes to. It hasn’t offered any commitment to stop possession proceedings though, if Mr T does rent the property out. Virgin says it would have to reassess the situation, if that happened. Again, given the nature of the lending and the arrears on the

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account, I think that’s a fair and reasonable position for Virgin to have taken. I appreciate this isn’t the response Mr T was hoping for, but I don’t think the key points in his complaint should be upheld. I do think it was fair for Virgin to offer Mr T a payment of £50 to compensate for not having promptly resent a complaint response letter when he asked for it, so I will ask Virgin to pay that now, if it hasn’t already done so. I understand this may upsetting for Mr T, and I’m sorry to have to disappoint him, but I don’t think I can fairly and reasonably require Virgin to do more than that. My final decision My final decision is that Clydesdale Bank Plc trading as Virgin Money must pay Mr T the sum of £50 which it previously offered, if it hasn’t done so already. Under the rules of the Financial Ombudsman Service, I’m required to ask Mr T to accept or reject my decision before 15 April 2026. Esther Absalom-Gough Ombudsman

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