The directive (2014/17) setting up a framework for granting housing loans in the European Union came into force on Monday 21 March. The text applies to credit agreements relating to residential immovable property for both secured credit and home loans. It aims to create a European mortgage credit market with a high level of consumer protection.
The directive introduces a standard document containing essential pre-contractual information, such as the annual percentage rate of charge, to help borrowers choose and compare offers on a cross-border basis. Consumers will have seven days to withdraw from their investment with no penalty. Any tied selling, which would require the borrower to take out specific insurance linked to the mortgage credit from the same establishment, will be forbidden.
In the case of loans denominated in foreign currency, transparency will be required regarding the financial risks linked to exchange rate fluctuations. Finally, borrowers will be able to reimburse their loans early. It is up to the Member States to define the conditions of this provision, such as the granting of compensation for the lender. Lenders will be required to evaluate consumers’ solvency in order to propose a suitable product. Credit intermediaries fulfilling the entry conditions in the Member State of origin will benefit from a European passport, giving them the possibility to provide services within the internal market.
The directive is available at the following link: http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2014:060:0034:0085:EN:PDF