EU Mortgage Credit Directive FAQs
The Mortgage Credit Directive (MCD) has introduced an EU-wide framework of conduct rules for mortgage activities. It's created minimum regulatory requirements that all member states must comply with to provide consistency in protecting consumers taking out credit agreements for residential property.
The changes for the EU MCD took effect from Monday 22 February 2016. Full details of the legislation can be found on the Financial Conduct Authority (FCA) website.
The MCD requires lenders to provide the customer with a binding offer and a reflection period.
We'll consider an offer to be binding on us from the date it's issued and your client's acceptance to the Mortgage Conditions will be from when the funds are drawn down.
The reflection period will last for 9 days (allowing for 2 days postage) and this will begin from the date the offer is produced. Your client can choose to waive the reflection period by contacting Nationwide or, where appropriate, by their solicitor returning the Certificate of Title.
Nationwide continues to issue a Key Facts Illustration (KFI) document and includes the additional MCD disclosures in the relevant sections, rather than in a separate document.
The European Standard Information Sheet (ESIS) will replace the existing KFI document and lenders must begin using the ESIS by 21 March 2019. As part of MCD, lenders can continue to issue a KFI until 2019, but it must include the following information:
- An additional disclosure about the new reflection period,
- The new APRC (Annual Percentage Rate of Charge) which replaces the existing APR calculation,
- An additional APRC, where the interest rate is variable and
- Extra information for foreign currency loans (where applicable).
EU MCD has introduced changes to the way foreign currency loans are defined, processed and managed.
Nationwide’s lending policy doesn't currently support foreign currency lending to new borrowers.
Nationwide can only withdraw a Binding Offer in limited circumstances, such as if:
- There's a material change to financial or personal circumstances, or a change in the property value.
- There is reason to believe we've been given false information.
- Investigation into the property's title raises issues making it unacceptable.
Yes, we'll accept the solicitors Certificate of Title as confirmation of your clients wish to waive the reflection period.
We hope we have answered the most common questions above, but if you're still unsure about something, you can contact one of our experienced advisers on Broker Chat.