Great when times are good but beware... (Virgin One)

Member Name: neuromancer

Product:	Virgin One
Date:	24/08/05 (4922 review reads)
Rating:

Advantages: Flexible borrowing & easy to pay off early

Disadvantages: Not covered by standard mortgage legislation

All the good things written about the Virgin One Account seem to be true. It's a great way to pay off your borrowing early and can save a significant amount in interest payments. Great.

Notice that I used the term 'borrowing'? This is important.

The One Account is exactly that: an account. The term 'mortgage' is used in their literature and on the forms you sign when switching to the account but this is NOT the same use of the word that most of us are familiar with.

This use of the word 'mortage' refers only to the fact that the sum borrowed is secured by a charge over a property. It is NOT considered a 'mortgage' by the law is the same way as a traditional loan taken out specifically to buy a house.

If you get into trouble paying a traditional mortgage, the court will do everything in its power to keep you in your home. The judge can instruct the bank to accept lower payments for a while, to cancel collection costs and even to add the arrears to the end of the loan and extend the mortgage term. This is because the law has been written to specifically help people who are temporarily unable to repay a loan used to purchase their home.

This is NOT the case with a One Account.

The law considers the One Account as an 'all money loan'. Although it is secured on a property, it is effectively just a big bank overdraft and is not recognised as a home loan in English law. This means that if you get into arrears for any reason and end up in court for non-payment, the court CANNOT treat the matter in the same way as a traditional mortgage. The court is OBLIGED to grant a repossession order on the property without even hearing the details of the case. They CANNOT take into account any mitigating circumstances, they CANNOT accept an offer to pay the arrears in full and they have NO RIGHT to negotiate with the bank on your behalf.

Everything the Citizens Advice Bureau and other debt advice services may tell you about going to court for mortgage arrears does not apply to the One Account. All the advice about preparing a file of information about why the problem exists and how you intend to remedy the situation is pointless - the judge is not even allowed to look at it. All he/she can do is grant the reposession order. That's it.

You may not lose your home even when the order is granted - it may be possible to negotiate a deal directly with Royal Bank of Scotland but they seem to prefer doing this once they know they have the order in place. I tried to come to an agreement with them before things got as far as going to court but they were not interested. On the day the repossession order was granted, they accepted the same deal I offered before.

We were lucky - our financial problems were short-term and we were able to repay the arrears in large amounts over a short period. Now we're in the odd position of being in a far better financial position that ever (better than when we first signed up for a One Account!) but we still have a 'live' repossession order on our house and we're stuck with a One Account we can't use.

It seems that our experience is not uncommon - on the day I went to court, the judge issued 50 repossession orders against One Account customers in a single afternoon.

Summary: What they DON'T tell you (even in the small print)