Borrowers advised to remortgage before EU rulings introduced

May 10, 2015 by Brendan O'Neill

Borrowers

Mortgage experts, including the founder of MoneySavingExpert.com, have warned borrowers considering remortgaging to another lender to do so before new EU rulings come into force in March 2016.

The new EU Mortgage Credit Directive is an extension of the increased regulation and affordability introduced to Britain in 2014 following the Mortgage https://www.beaconfinancialtraining.co.uk/wp-content/uploads/2020/06/cemap-online-and-classroom-training-uk.jpget Review (MMR), which was carried out by the Financial Conduct Authority (FCA).

New, more stringent affordability tests were introduced to make sure lenders proved borrowers could afford the repayments on their mortgage, at both the current rate and also if it were to increase by several percent.

Currently under British rulings, providing the borrower’s personal circumstances have not changed, and they are not looking at increasing their borrowing, the FCA has given lenders the discretion to bypass the affordability when it is an existing borrower looking to remortgage to another lender.

Once the EU directive comes into play next year, they will be unable to do this, meaning a large number of homeowners could find themselves stranded on their lender’s more costly Standard Variable Rate (SVR).

As a mortgage professional, before you are able to meet with customers, you will need to complete your CeMAP training and obtain a pass in the final exam. Then you will be able to complete a full affordability assessment on your customers before advising how much they are able to borrow, and also the most appropriate mortgage solution for their personal circumstances.