European Mortgage Directive – UK Buy-to-Let and Guarantor Mortgages carved out

SUTTON COLDFIELD, U.K. - May 7, 2013 - PRLog -- The final negotiations between the European Parliament, Council of Ministers and European Commission concluded on 22nd April 2013 and it was confirmed that UK buy-to-let mortgages will receive a full exemption from being regulated in the same way as residential mortgages and remortgages. Four crucial opt-outs were also secured for UK business for tough new rules which are to be implemented on packaged products that will protect guarantor mortgages, shared equity products, offset mortgages and endowments.

Part of the directive has sought to end the previous practice of almost forcing borrowers to take out other related products in order to get a mortgage. Without the carve outs for the UK it would have effectively banned products such as Barclays’ Family Springboard range and Lloyds Banking Group’s Lend a Hand deals as they require customers saving accounts to be tied to the mortgage. A European Mortgage Federation senior adviser says: “Lend a Hand deals were one of the key issues for the UK, it pushed really hard and managed to get what it wanted. It is also a fairly unexpected win on buy-to-let because the realistic hope was a partial exemption for the foreseeable future, but it managed to get the full exemption with immediate effect.”

It is also understood that the UK seems to have won another exemption; it will retain the Key Facts Illustration (KFI) instead of initial plans to replace it with the European standardised information sheet. The new rules will amongst other things see the introduction of a seven day cooling off period, remove penalties for early repayment charges (ERC’s) and restrict misleading advertising. The directive will also introduce a rule allowing borrowers to simply return the property to cover any mortgage default as long as it is expressly agreed in the contract, rather than facing claims for the unpaid mortgage payments.

Rapporteur and Spanish MEP Antolin Sanchez-Presedo says: “The new legislation on mortgages will become a reference in terms of consumer protection, financial inclusion and economic stability. It will help to avoid the irresponsible lending and borrowing that were at the roots of the current crisis.” A draft text from trialogue negotiations is due to be published on 8 May and the European Parliament will cast its final vote on 11 June when it meets in Plenary. It is expected the new rules will be finalised and introduced in September. The UK will then have two years to introduce the directive into law through regulation or legislation.

This news will be well received across the UK mortgage industry which had feared the introduction of the EMD could stall the improvements being seen in the UK mortgage market. It will also be music to the ears of mortgage brokers as a high percentage of buy to let mortgages in the UK are arranged through or by a buy to let mortgage broker. Many people use mortgage brokers for buy to let mortgages in the UK as they will not only source the most competitive mortgage for you from the whole market they will also handle all the paperwork and liaise with third parties such as lenders, estate agents and solicitors on a clients’ behalf. Visit http://www.caboodlefinance.co.uk for more information and guidance from a UK whole of market buy to let mortgage broker.

Buy to let brokers have a distinct advantage against the high street in the UK when it comes to buy to let mortgages as although there are a number of lenders who offer buy to let mortgages there are a significant number who only provide them through buy to let mortgage brokers and intermediaries, so they are not accessible direct to the public. It doesn`t matter whether you are a professional landlord with a large portfolio of buy to let properties, a relatively new landlord with just a few buy to let properties or you are considering buying your first buy to let property, a mortgage broker will research the whole market to find the most suitable mortgage for your individual circumstances and requirements. To view some of the best deals available in the UK mortgage market visit http://www.caboodlefinance.co.uk/Index.asp?T=Mortgage-Finder-2

Buy to let brokers provide both purchase mortgages and remortgages and already help many landlords manage the mortgages on their whole portfolio to ensure they are on the most competitively suitable deal when the mortgage on each buy to let property they have reaches its review date. As each buy to let mortgage approaches review the circumstances, needs and priorities of the landlord are also updated with them to ensure their on-going goals are achieved. For more information about mortgages and remortgages in the UK at no obligation visit http://www.caboodlefinance.co.uk/Index.asp?T=Mortgages-Remortgages-2