Anyone who does not receive (part of) their income in euros can no longer obtain a mortgage. This is a consequence of the introduction of the European Mortgage Directive, which has been in place since July 14 last. is in force. This directive, also known as Mortgage Credit Directive (MCD), affects not only expats and (international) employees at multinational companies, but also the'ordinary' Citizen who happens to have built up a pension in for example Canadian dollars or English pounds.
Directive
The objective of the Mortgage Directive is to better protect consumers when and after taking out a mortgage. For example, the consumer now has the right to cancel the binding offer free of charge within 14 days of it being made.
Also in the offer the consumer gets more and better insight into the costs to be incurred and the bank is no longer allowed to make a profit on early repayments. And banks are now required to better help people who run into payment problems.
Mortgages in foreign currency
In many European countries in the past you could take out a mortgage in, say, Swiss francs or Japanese yen. In addition to the country's specific interest rate risk, another risk was added, namely the currency risk. If, for example, the exchange rate increases, then (converted into euros), more must be repaid for the same mortgage. Not surprisingly, there have been many problems with these foreign currency mortgages.
With the introduction of the MCD, these consumers will be better protected. In the case of foreign currency, the bank is given a number of obligations and the consumer a number of rights. For example, the bank must regularly warn consumers about its risks. In any case when the value of the remaining loan or future instalments differs by more than 20% at the time of taking out the mortgage. In addition, the consumer has the right to have his mortgage converted into another currency and the bank is obliged to comply with it.
Right of conversion into other currency
And therein lies the problem. The rules on foreign currency are not only about mortgages in foreign currency, they also apply when someone has an income in a foreign currency and based on this takes out a mortgage in euros. Even then, consumers have the right to have their mortgage converted into the currency in which they are paid out.
Banks do not like this. Many administrative systems are not even set up to administer in another currency. The mandatory monitoring during the term of the mortgage is also not seen as appropriate.
No mortgages
The banks go for certainty. As a result, when someone receives or starts receiving (part of) their income in a foreign currency (for example, when people retire), they can no longer get a mortgage at this time.