The Economic and Monetary Affairs Committee has approved proposed new rules that will make buying a home a much easier and practical affair.
Brits and other Europeans working and living anywhere within the EU will benefit from the new regulations, which aim to ensure mortgages are suitably matched to the unique position of certain buyers.
The rules will also scrupulously check the creditworthiness of would-be property buyers to ensure that subprime lending, one of the core causes of the 2008 global financial crisis, is never allowed to happen again.
In circumstances where buyers find themselves in financial difficulties, the new rules will provide greater protection against asset seizure.
“Parliament has given a qualitative breakthrough regarding the initial text. We now have more ambitious legislation which establishes the international golden standards bringing in the principles recently adopted by the Financial Stability Board,” commented Antolin Sanchez Presedo, a Spanish politician and member of the European Parliament.
“We introduced a new chapter on financial education, strengthened information to consumers, established a reflection period and the possibility to receive good advice as well as fair principles for crisis situations,” he continued.
With reference to financial advice and information for prospective borrowers, lenders will be required to provide impartial guidance; including making them understand the long-term implications of committing to a substantial loan.
The breakthrough aspect of the proposals is in the safeguarding of buyers, whose “misjudgements” might lead them into problems.
However, it has to be noted, that it is better to be preventive than curative – mortgages should only go to those who can afford them.
Consequently, appreciating that circumstances can change for both lenders and borrowers, it is proposed that mortgages come with a realistic degree of flexibility.
This may include, for example, the ability of a borrower to pay off a mortgage early and for a lender to be suitably compensated for such an instance. What won’t be allowed is for penalties to be issued to borrowers for paying ahead of schedule.
Now that the Economic and Monetary Affairs Committee has approved the proposals, MEPs can open up negotiations with the member states of the EU.