Save for email alerts?
Save for email alerts?

The Mortgage Credit Directive - how will it affect landlords?

Occasionally, you may find yourself with a property that you don’t need. You may have been left it in an inheritance or you may simply be unable to sell for a number of reasons.

When this happens, an option for you to consider is to let out your property. If you choose to do this, as you never intended on purposefully buying the property to let out, you would become what is known as an ‘accidental’ landlord, otherwise known as consumer buy-to-let.

At the moment, consumer buy-to-let mortgages are unregulated by the FCA, but as of March 2016, this is all set to change. Helen Little of Tiffen & Co, Mortgage Advice Burea explains how the new rules could affect you.

What is the Mortgage Credit Directive and what are the new rules?

The new laws were not originally going to affect the British mortgage market; however, the plans will now form part of the Mortgage Credit Directive (MCD) – a wider scheme that will be implemented in March to regulate other loans that have homeowners’ properties as security.

Under the new European Union (EU) regulations, those who find themselves inadvertently becoming landlords will have to pass new affordability tests – similar to those faced when applying for a residential mortgage.

The tests will see lenders assess both borrowers’ incomes and expenditure in much greater details to ensure that they can afford any potential rises in costs.

Why have they brought these regulations in?

According to the Council of Mortgage Lenders (CML), there were 1,630,600 buy-to-let mortgage products in existence at the end of 2014, and out of these, a fifth were accounted for by ‘accidental’ landlords.

As ‘accidental’ landlords do not make a ‘business’ decision to let their properties out and do it as a result of circumstance, the government feel that these borrowers should still be seen as consumers and need to be covered by an “appropriate framework”.

How will it affect me?

Under current rules, these mortgages do not follow the same regulations as residential mortgages and most are calculated in relation to the amount of rental income that is to be made from the property.

However, from March 2016, affordability will be assessed and it could also mean that older home-owners may not be able to take out a buy-to-let mortgage as lenders often require borrowers to repay the whole loan back before they retire.

Though the rules aren’t set to be implemented until March 2016, it is important that you plan your finances in advance by using the help of a professional mortgage adviser.

Helen Little is from Tiffen & Co, Mortgage Advice Bureau – for further information

Call: 01288 510553

There is no guarantee that it will be possible to arrange continuous letting of the property, nor that rental income will be sufficient to meet the cost of the mortgage.

Your property may be repossessed if you do not keep up repayments on your mortgage.

There will be a fee for mortgage advice. The actual amount you pay will depend upon your circumstances. The fee is up to 1% but a typical fee is 0.3% of the amount borrowed.


MORTGAGES - Landlords take note

by Helen Little
TAG CLOUD mortgages tiffen and co mortgage advice bureau auction house cumbria new website property sales estate agency property for sale in carlisle property for sale in workington property for sale in whitehaven property for sale in cockermouth auction september auction Tiffen and Co Mortgage Advice Mortgage Advice Bureau Mortgage Advice in Carlisle Tiffen & Co Auction House Cumbria stamp duty buy to let landlord mortgages houses for sale in cumbria Mortgage Advice Bureau; Mortgage Advice Carlisle Mortgage Advice Carlisle auction houses for sale in cumbria buy to let landlord mortgages mortgage advice bureau tiffen and co FOR SALE BOARD TIFFEN & CO PROPERTY FOR SALE IN CARLISLE Interest Rates Bank of England Mortgages Critial Illness Cover Tiffen Mortgage Afvice Property Auction in Cumbria Property for sale in Cumbria buy to let mortgages investors landlords mortgage credit directive mcd JOBS CAREERS MORTGAGE ADVISER CARLISLE ESTATE AGENCY MORTGAGE ADMINISTRATOR sold estate agency carlisle estate agency workington estate agency cockermouth estate agency whitehaven moving home downsizing investment property property for sale Carlisle property for sale cockermouth property for sale workington property for sale whitehaven property for auction property auction cockermouth cumbria floods estate agency in cockermouth estate agents in cockermouth Job Vacancy Career Opportunity estate agents Buying with a partner help to buy mortgage advice mortgages. mortgage advice interest rates brexit mortgages bank of england base rate decrease new build bungalows seascale whitehaven the dunes new build bungalows seascale Zoopla estate agency carlisle workington whitehaven cockermouth Christmas Greeting Festive Estate Agency.

Need a Valuation?


By submitting this form, you agree that we may contact you about properties we think might interest you using the details you have provided.
Thank you for contacting us.
There was an error while sending your message.
Please wait...


Register to receive email alerts of properties matching your requirements.


Register to receive email alerts of properties matching your requirements.


Don't just take our word for it! Read our clients reviews.


Don't just take our word for it! Read our clients reviews.
read all

Latest News

Click here to catch up on all of our latest news.


Click here to catch up on all of our latest news.
read all