Mortgage Credit Directive - amendments to lender mortgage documentation – information for stakeholders
This table provides information about the changes lenders are making to their mortgage documentation in order to comply with the Mortgage Credit Directive (MCD), due
to come into force on March 21 2016. The CML website has general information about the MCD changes.
Acronyms:
KFI = Key Facts Illustration. For regulated mortgages, it is a regulatory requirement that a KFI is provided to the prospective customer to enable them to assess the key
features and cost of the product.
ESIS = European Standardised Information Sheet. This will replace the existing Key Facts Illustration for the UK from 22 March 2019, a requirement of MCD.
Lender
Nationwide
Formal customer
acceptance
process (Y/N)
N
Documentation wording
Mortgage offer
With regard to the reflection period we have included a new s12a –
12a. Other rights of the borrower
You have (9) days after we have given you our binding mortgage offer, or confirmed our willingness to be bound by a previous
conditional offer, to reflect before committing yourself into taking out this loan.
For COT wording, please see separately attached documents
LBG
N
The text in the Main mortgage offer will read:
Reflection Period
We are required to give you time to consider this offer. We have given you 10 days after <Date of Issue> to consider and
reflect on the terms and conditions of this loan agreement. You can take longer. If you wish to proceed before the 10 days
expire you can do so by telling the conveyancer dealing with the mortgage. If the conveyancer requests release of the funds for
this offer before the 10 days expire this will be considered as confirmation that you have waived your reflection period for this
offer. In any event the reflection period will end when the mortgage starts.
For a non main offer (FADs, Transfer of Equity) the text will be:
Reflection period
We are required to give you time to consider this offer. We have given you 10 days after <Date of Issue> to consider and
reflect on the terms and conditions of this loan agreement. You can take longer. If you wish to proceed before the 10 days
expire you can do so by telling the conveyancer dealing with the mortgage. If the conveyancer requests release of the funds or
confirms that the transaction has completed before the 10 days expire this will be considered as confirmation that you have
waived your reflection period for this offer.
Display if no conveyancer:
We are required to give you time to consider this offer. We have given you 10 days after <Date of Issue> to consider and
reflect on the terms and conditions of this loan agreement. You can take longer. If you wish to proceed before the 10 days
expire you can do so by asking for the loan amount. If you do so this will be considered as confirmation that you have waived
your reflection period. In any event the reflection period will end when the loan is released.
The conveyancer instructions for main offers will read:
You must not release the mortgage advance:
within the offer reflection period unless the borrower has told you they wish to proceed
Or for non mains
If a reflection period applies, You must not release any funds or complete the transaction within the offer reflection period
unless the borrower has told you that they wish to proceed.
Yorkshire BS
N
Mortgage Offer
The following paragraph will be included on the first page of the mortgage offer document
“You have a “reflection period” which gives you an opportunity to consider this mortgage offer, assess the implications and
make an informed decision about whether to proceed. This reflection period begins on the date of this mortgage offer and
expires 7 days after that date – please see the section of this Offer entitled “Supplementary Information Required under the
European Mortgage Credit Directive”. During this period this mortgage offer remains binding on us as lender. However you are
free to accept this offer at any time during the reflection period and you do not have to wait for the 7 days to run out. We will
treat the receipt of the certificate of title from our legal adviser as confirmation that you have chosen to accept this mortgage
offer; this applies whether we receive the certificate of title before the end of the reflection period or afterwards. The
certificate of title is the document our legal adviser will send to us shortly before completion of your mortgage and this
document confirms to us that the title to the property is good and marketable and will form suitable security for our lending.”
Similar wording, adapted as necessary, will appear on the first page of our Additional Loan Offers and Transfer of Equity Offers.
That wording will also appear on any revised mortgage offer which may be issued.
Covering Letters to mortgage offers
The covering letter to our legal adviser enclosing the applicant’s mortgage offer will include the following new wording
“As you will be aware new rules under the Mortgage Credit Directive apply from 21 March 2016 which mean that when we
issue a binding mortgage offer, the applicant is given a reflection period of 7 days from the date of the offer. This reflection
period is detailed in the enclosed mortgage offer and confirms that the applicant is able to accept their offer without waiting for
the 7 day reflection period to expire. The offer also confirms that we will treat receipt of your certificate of title as confirmation
that the applicant has chosen to accept their mortgage offer even where we receive the certificate of title from you during the 7
day reflection period. Because of this, please ensure that the applicants are happy to proceed with their offer before you send
in your certificate of title.”
The covering letter to the applicant enclosing their mortgage offer will make it clear that they will need to accept their offer –
either directly or by the act of our legal adviser sending us their certificate of title. That letter will refer the applicant to the first
two pages of their mortgage offer for further details around their accepting the offer and the reflection period.
Again similar wording will be included in the letters enclosing any revised offer to the legal adviser and applicant respectively.
Likewise that wording, adapted as necessary, will be included in the equivalent letters enclosing any Additional Loan Offers and
Transfer of Equity Offers.
Certificate of Title (COT)
The following paragraph will be included after the existing paragraph “We confirm that the title to the Property is good and
marketable.”
“(All jurisdictions)
We confirm that the Borrower has accepted the mortgage offer bearing the same date as the Date of Instructions above.”
Aldermore
N
Similar wording, suitably adapted, will be included in the equivalent certificate we require our legal advisers to submit in
transfer of equity transactions.
Mortgage offer
You have a reflection period of 7 calendar days from when you receive this offer during which you can withdraw. You can also
withdraw at any time whilst the offer is valid. You can waive the reflection period and choose to complete your mortgage by
authorising your conveyancer to waive the right of reflection on your behalf by sending us a certificate of title and request for
funds.
The Tipton BS
Skipton BS
Leeds BS
Y
N for new lending
Y for additional
borrowing
Y
Solicitor offer cover letter
If the mortgage is a regulated mortgage contract, your client will have a reflection period of 7 days from the date a binding offer
is issued. Receipt of a Certificate of Title requesting funds within the reflection period will be taken as confirmation that you
have been authorised by your client(s) to waive the reflection period and accept the offer on his/her or their behalf.
See separately attached documents
Standard Offer Condition
Reflection Period
From the date of this Offer you have a period of 10 days to consider this Mortgage Offer and this is known as a “Reflection
Period”. You may wish to confirm your acceptance of within this 10 day period by telephoning us on 0345 850 1711.
If the period from the date of this Mortgage Offer and the proposed completion of your mortgage is less than 10 days then the
Society will treat the receipt of the request for funds by your Solicitor or Conveyancer as your confirmation that you wish to
proceed to complete your mortgage within the Reflection Period. You must tell us is this is not the case.
If there are more than 10 days between the date of the Mortgage Offer and completion and you have not chosen to accept the
offer then our Mortgage Offer will still remain available for the period (usually 6 months) from the date of the Mortgage Offer.
If you notify us that you do NOT accept the Offer, then you will have cancelled it and it will be deemed to have been withdrawn
forthwith.
All offers since mid- December 2016 are MCD compliant with these clauses inserted.
Wording within the Mortgage Offer
You have 7 days from when you receive this Offer document to reflect on its terms and conditions. You may accept this Offer at
anytime during this 7 day period by signing and returning the Offer Acceptance Form.
Wording within the Offer Acceptance Form
You have 7 days from when you receive the enclosed Offer document to reflect on its terms and conditions. You may accept
the Offer at anytime during this 7 day period by signing and returning this Offer Acceptance Form.
The Coventry
BS
N
Illustration (aka KFI/ESIS)
This illustration is valid only at the time of issue. The Society reserves the right to withdraw the scheme(s) contained within this
illustration without notice.
This is not a legally binding mortgage offer and it does not oblige Coventry Building Society to provide you with the mortgage
described in this illustration.
You have ten days after the date of your mortgage offer to reflect before committing yourself to taking out this loan.
Mortgage Offer
This Offer is valid until <DATE> and is made subject to the enclosed Mortgage Special Conditions and Product Special
Conditions, and all other matters contained in this Offer document. Should you wish to proceed after this date a new Offer will
need to be authorised and will only be issued with a product available at that time. Conditions will be subject to the Society's
lending policy at that time and may be subject to payment of further fees.
You have ten days after the date of this mortgage offer to reflect before committing yourself to taking out this loan. We will,
however accept your approval to proceed at any time within the offer period stated above.
The terms contained in this Offer set out the agreement between you and the Society and you will be bound by them on
completing this mortgage. It is important that you compare this Offer with the Key Facts Illustration given to you before you
applied for this mortgage, to see how any details may have changed. In the event of any differences between the two, the
terms of this Offer shall prevail.
If any Mortgage Special Condition or Product Special Condition contained in this Offer is or becomes wholly or partly invalid or
unenforceable, the remaining Special Conditions will remain valid and enforceable. Where there is any inconsistency between
this Offer and anything contained or incorporated in the Mortgage Deed (for mortgages in England, Wales and Northern
Ireland) or the Standard Security (for mortgages in Scotland), the terms of this Offer will apply.
Barclays
N for new lending
Y for additional
lending (but will
also accept COT
submission)
Mortgage Special Condition
We may, acting reasonably, vary or withdraw this offer at any time before completion if it subsequently transpires that: i) you
have knowingly provided incomplete or inaccurate information to us or have knowingly falsified or withheld information which
we have requested or used in assessing your ability to afford the loan, ii) the solicitor/licensed conveyancer acting is unable to
provide us with a clear certificate of title or cannot comply with our instructions in relation to the property, iii) matters are
identified that do or could potentially adversely affect the property value or are inconsistent with the basis on which the offer is
made, or iv) there is a material change in your circumstances (such as a change in your employment or where you take out
further secured borrowing on your home) which we reasonably consider is likely to have an impact on your ability to afford the
loan.
We have added the following box to both our KFI top up and also our offer, this is located to the rear of both documents.
A2 – Your right of reflection
You have 7 days after the date of the offer to reflect before committing yourself to taking out this loan.
We state the reflection period is 7 days from the date of the offer (this is 7 calendar days not working days) and we have set our
systems up to automatically mark the reflection period as over after 10 days to enable time for the offer to get to the customer,
however this can be waived during this period if requested by the customer(s) or will be waived on receipt of the COT. Within
the mortgage offer we added additional wording on top of this to ensure that the message is presented and understood
correctly by the customer.
“Unless you have confirmed directly to us that you wish to proceed with our mortgage offer before the end of the reflection
period we will take the receipt of the certificate of title or report of title from your conveyancer as evidence that you have chosen
to proceed with our offer before the end of the reflection period. The certificate of title is the document your conveyancer will
send to us shortly before completion to confirm that the title to the property is good and marketable and that it is safe for us to
lend”
In addition to the wording within the offer the COT has been amended to ensure that the conveyancer is aware of their
obligations when sending the COT back to us
RBS
“We have received clear instructions from the Borrower, or where the Borrower is represented by a different conveyancer from
that conveyancer acting on their behalf, that the Borrower has chosen to proceed with your mortgage offer before the end of
the reflection period and to request you to release the mortgage advance to us.”
We have included the following wording in our sales ESIS (KFI):
You have at least seven days after we have given you a binding offer, or confirmed our willingness to be bound by a previous
conditional offer, to reflect before committing yourself to taking out this loan. The validity period of the offer will be specified in
the relevant offer.
In our offer we incorporate an ESIS. That ESIS states:
You have at least seven days after we have given you a binding offer, or confirmed our willingness to be bound by a previous
conditional offer, to reflect before committing yourself to taking out this loan. The validity period of the Offer is specified in
section 2 of this Offer.
In the validity period section of our offer we state:
This Offer is valid until [insert date]. You may accept the Offer at any time on or before that date however once you have
accepted this Offer there is no right of withdrawal. Although there is no right of withdrawal, you have the right to repay the
Loan in accordance with the terms of this Offer
Our offer validity period is either 3 months or 6 months depending on the type of borrower/product. Customers therefore have
in fact a reflection period of 3 or 6 months.
Compiled by CML, February 2016