If you’re new to the world of mortgages, you might have heard about the Mortgage Credit Directive. We take a look at what it is and how it affects you.
When you step onto the housing ladder, you’ll no doubt be surrounded by lots of new terms and jargon – one of them being Mortgage Credit Directive.
We’ve answered all your questions and more about how the Mortgage Credit Directive could affect you.
So, what is it?
Back in 2016, rules were introduced that gave borrowers more protection when they looked for a mortgage, remortgage or secured loan. The rules were designed to inform customers about the real cost of a mortgage and help them compare deals between competitors.
All of these rules came under the ‘Mortgage Credit Directive’ (MCD).
When did the Mortgage Credit Directive come into force?
The Mortgage Credit Directive was originally introduced by the European Union in 2014. All member states within the EU then had to change their own national regulations to keep in line with the Mortgage Credit Directive by March 2016.
Will the Mortgage Credit Directive stay when we leave the EU?
In short, yes. Because the Financial Conduct Authority (FCA) adopted these rules, these rules are now rooted in UK law.
What is an MCD regulated mortgage?
An MCD regulated mortgage is a mortgage that follows the rules and practices of the Mortgage Credit Directive.
Put simply, any mortgage or secured loan company that’s authorised by the Financial Conduct Authority (like us) will only offer you MCD regulated mortgages. This means that they should be upfront about the costs you’ll have to pay and offer you a fair chance to compare deals without putting you on the spot or under pressure.
Take a look at some of the main things an MCD mortgage offers you:
You’ll see the overall cost of mortgage
Thanks to the Mortgage Credit Directive, you’ll see the total cost of what you’ll pay including any fees and interest rates. This will help you compare the deal to others on the market.
You have time to think about a deal
An MCD mortgage means that you’ll have 7 days to reflect and think about the offer you receive. This could either be pre-sale, post-sale or somewhere in between.
You can make early repayments
According to the MCD rules, customers should have the ability to make early repayments on their mortgage, remortgage or secured loan.
Knowledgeable and competent staff
The MCD states that lending companies should be both competent and knowledgeable in their field, to give customers the best advice to make an informed decision.
Fair and easy-to-understand marketing
If you see an advert for a mortgage, remortgage or secured loan, you should be able to clearly see all of the information needed to make a choice that’s right for you.
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Intelligent Lending Ltd (Credit Broker). Capital One is the exclusive lender.