Vida Bank Limited · DRN-6103544

The complaint Mr B and Mrs C complain that Vida Bank Limited trading as Vida Homeloans offered them new deals on their Buy To Let mortgages at higher interest rates than those offered to new customers. Mr B and Mrs C said this was deeply unfair, and costing them money. What happened Mr B and Mrs C said they had recently secured new fixed interest rate mortgage deals on two Buy To Let mortgages held with Vida. They were very disappointed in the rates offered to them, but as they had no alternative remortgage options, they had to take them. Mr B and Mrs C said they obtained a five year fix at 6.29%, with no product fees. But they said that at the same time, new customers could get either a 5.50% with a 0.75% product fee or a 5.10% with a 2.00% product fee. Mr B and Mrs C said they would be paying less now, if they had been eligible for either of these options. Mr B and Mrs C didn’t think the rates they were offered were fair. They said their rate had gone up since they had fixed two years ago, despite several rate drops over the last year. Mr B and Mrs C thought they should be offered the same product which was available to new customers, and that not doing so was discriminatory and unethical. Vida didn’t think it had done anything wrong. It said Mr B and Mrs C had accepted product switches on these two mortgages, and the documentation was clear that once a product switch was accepted, it could not be cancelled. Vida said when someone does a product switch, Vida provides a rate tailored to its existing customers, based on the original underwriting. Existing customers don’t have to pass underwriting, or pay for a valuation or legal fees. So their remortgage is quicker, simpler and with lower upfront costs. New customers, however, will go through a full underwriting assessment, and pay for a valuation and legal work. Vida said the positions of existing and new customers are fundamentally different, and the risks to Vida are also different. That’s why new borrower rates can be different to those offered to existing customers doing product switches. Vida said all of this is clear to existing customers, before they take a new rate. And it had explained to Mr B that existing customers cannot access new customer rates, before the new rates were taken. It hadn’t offered Mr B and Mrs C mortgage advice before they switched, but it does encourage customers to seek independent financial advice if they wish. Vida didn’t think it had to offer Mr B and Mrs C the new customer rates now. Our investigator didn’t think this complaint should be upheld. He said the mortgages Mr B and Mrs C have complained about, are BTL mortgages. Those mortgages are generally designed for people looking to run a business by renting out properties to generate a profit. Because they are for a different purpose, BTL mortgages don’t come with the same consumer protections given to residential mortgages, and Vida doesn’t have to meet the

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same tests. What it is doing, our investigator said, is treating Mr B and Mrs C the same as all other customers who are in the same position - existing customers seeking a product switch at the relevant loan-to-value. He didn’t think that was unfair or unreasonable, and he said he wouldn’t ask Vida to do anything further. Mr B and Mrs C didn’t agree. They wanted their case to be considered by an ombudsman, so it was passed 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’m sorry to have to tell Mr B and Mrs C that I don’t think what has happened here is unfair or unreasonable. I’ll explain why I think that. I should start by saying I understand why Mr B and Mrs C feel that they, as loyal customers with a proven payment history, should be offered the best deals available. But Vida has explained why it takes a different view. I think it’s relevant not only that new customers face additional costs when they are taking out their first mortgage with Vida, which aren’t a factor for those remortgaging, but also that those new customers must pass a rigorous financial assessment, which existing customers are generally not subject to. Some of those new customers will be turned down for lending by Vida, but that isn’t generally the case for existing customers. As Vida says, that means the risks arising from new and existing customers are quite different. Mr B and Mrs C haven’t suggested that they would have been willing to go through the same external mortgage application which new customers must pass, in order to access the rates reserved for them. I also think it’s relevant that these are unregulated mortgage agreements, which are entered into for business purposes, and which therefore stand outside the protections attached to mortgages used to provide the buyer with their own home. And in that overall context, I don’t think it’s unfair or unreasonable for Vida not to have offered Mr B and Mrs C the same rates as those which were available to its new customers. I don’t think Vida has to do that now. I know Mr B and Mrs C will be disappointed, but I don’t think this complaint should be upheld. My final decision I don’t uphold this complaint. Under the rules of the Financial Ombudsman Service, I’m required to ask Mr B and Mrs C to accept or reject my decision before 20 April 2026. Esther Absalom-Gough Ombudsman

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