The Mortgage Credit Directive

 In Mortgage Law

The Mortgage Credit Directive Mortgage Guardian

The Mortgage Credit Directive

The Mortgage Credit Directive – Currently mortgages for residential properties in the United Kingdom taken out by the consumer is a regulated activity and those that offer advice, arrange or manage home finance must be regulated by the Financial Conduct Authority (FCA). This means that the mortgage lender and your mortgage broker must be authorised which means that they must take steps to make sure you can afford the mortgage and also that the mortgage suits your needs and circumstances.

The Mortgage Credit Directive Mortgage GuardianNot all mortgages are regulated directly by the FCA but that is about to change with the Mortgage Credit Directive which takes effect from 21 March 2016. Currently buy to let mortgages taken out by consumers currently fall under the consumer credit arm of the FCA but after the Mortgage Credit Directive comes into force mortgages will fall under the same legislation which is ultimately designed to protect consumers. Whilst the Mortgage Credit Directive may seem like no big deal as the FCA already regulate firms and individuals on either or both the Financial Services Register and Consumer Credit register (depending on type of mortgage activity), the aim is to get mortgages on a single market for consumer protection.

This is EU legislation, however the Council of Mortgage Lenders think that the new directive will have little benefit for consumers over and above the current regulatory framework.

The new legislation will mainly affect some buy to let mortgages and foreign currency mortgages as well as changing some administrative and legal procedures when taking out a mortgage.

 

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