Vladimir has applied for a mortgage to buy a three-storey building with a shop on the ground floor and a two-storey maisonette on floors one and two. All floors are of an equal size. Vladimir intends to live in the maisonette and rent out the shop. The mortgage will be:
a) an MCD regulated mortgage.
b) a commercial mortgage.
c) a buy-to-let mortgage.
As roughly 66% of the building will be used as Vladimir’s home, and the mortgage will be arranged after 21 March 2016, it will be a Mortgage Credit Directive (MCD) regulated mortgage.
George wants to borrow £20,000 in the form of a personal loan to install a new bathroom and kitchen in his house. This loan would be subject to consumer credit legislation. True or false?
True. George wants to use a personal loan, rather than a further advance on his mortgage, to fund his home improvements, so the loan is subject to consumer credit legislation rather than MCOB. There is no upper limit on the amount of the loan covered by the legislation as the loan is not for business purposes.
Anita took out a second mortgage on her home in January 2016. Is her mortgage subject to MCOB?
Yes. Second‑charge mortgages entered into before 21 March 2016 are subject to MCOB if they meet the 2016 criteria for regulated second charges, despite being taken out before that date. They are referred to as ‘back book loans’.
Regulated mortgages on residential property are regulated under the Consumer Credit Acts 1974 and 2006. True or false?
False. Regulated mortgages are regulated under MCOB, not the consumer credit legislation.
What are the Consumer Protection (Amendment) Regulations 2014?
They replaced earlier rules on marketing and selling practices and apply whenever professionals (including estate agents) deal with consumers, ensuring sales are fair, honest, and not misleading.
