Mortgage Credit Directive

The European Mortgage Credit Directive (MCD) introduces a new European Union wide framework of conduct rules for mortgages. It is designed to ensure a high level of protection for customers taking out residential mortgage contracts. All lenders and mortgage intermediaries were required to comply with the new legislation by 21st March 2016.

Our Approach

We implemented the changes on Thursday 17th March 2016, and this coincided with the launch of our new Residential Mortgages broker portal. This page outlines our approach to MCD, and the key changes we made. For more information on MCD visit the FCA website.

Consumer Buy-to-let

New concept for buy-to-let mortgages aimed at borrowers whose property interest is not wholly or predominantly for business purposes. CBTL will be subject to regulatory supervision by the Financial Conduct Authority (FCA).

Our approach:

  • CBTL Definition - Buy-to-let remortgage transaction where:


1.  Residential property was previously occupied by the applicant/ related person or was inherited


2. Applicant does not already own other residential property that is also let (please note: the other property must not be let to a related person)

  • Our StandardBuy-to-let product range is available to customers taking out a CBTL mortgage.
  • Maximum 75% LTV and maximum loan of £600k apply.
  • All other existing Buy-to-let lending criteria (including affordability and rental assessments) apply.
  • Intermediaries submitting CBTL must have the relevant FCA permissions and our portal questions will ask that you confirm you have these when you submit your application.


The European Standardised Information Sheet (ESIS) will replace the Key Facts Illustration (KFI) by no later than March 2019. Until then, lenders are able to phase in changes using KFI+ which provides the new mandatory information and disclosures.

KFI+ will feature two Annual Percentage Rates of Charges (APRCs). The second APRC is based on the highest borrowing rate over the previous 20 years. This will help customers to understand the impact of any potential rate rises in the future.

Our approach:

  • We’ve adopted KFI+
  • We’ll transfer to ESIS in time for the regulatory deadline in March 2019
  • Our second APRC is based on the FCA’s benchmark rate and replaces the 1% interest rate rise warning in our KFI+

Foreign Currency Loans

MCD defines a foreign currency loan as either.

  • A loan in a different currency from that in which the customer receives their income or holds the assets from which the credit will be repaid
  • A loan in a different currency from that of the country in which the customer is resident.
  • The legislation means changes to foreign currency loan applications, including the need to explain the potential impact of fluctuations in exchange rates to customers


Our approach:

  • We don’t offer foreign currency loans and have no plans currently to introduce them
  • For residential owner-occupied interest only loans we no longer accept repayment strategies in a foreign currency (e.g. sale of property abroad)

Binding Offers and Reflection Periods

Under MCD lenders are required to provide customers with a ‘binding offer’ which may be subject to lawful conditions surrounding its withdrawal or variation.

There is also a new requirement to provide customers with a ‘reflection period’ lasting a minimum of 7 days, which starts once the binding offer has been issued.

This will give your clients time to reflect and review their offer, make comparisons and assess the impact of taking out a mortgage. Borrowers can choose to waive this if they wish to complete sooner.

Our approach:

  • Mortgage offers are binding from the date of issue
  • 7 day reflection period will start from the date your client receives their mortgage offer.
  • If the Certificate of Title (COT) is received within the 7 days it will be deemed the customer has chosen to waive the reflection period


We’ve compiled a handy list of FAQs for MCD and pipeline arrangements.

If you can’t find the answer to your query please contact our Broker Help Desk on 0333 321 1000.