Related provisions for MCOB 11.6.46A
1 - 10 of 10 items.
(1) If a firm treats any of the following changes as not likely to be material to affordability, this may be relied upon as tending to show contravention of MCOB 11.6.2 R:(a) an extension of the term of the regulated mortgage contract or home purchase plan which it is reasonable to expect will extend into (or further into)7 the customer's retirement (including a change from a mortgage with a term to a retirement interest-only mortgage)7; or(b) changing from a repayment mortgage
(1) Examples of future changes to income and expenditure in MCOB 11.6.14 R are: reductions in income that may come about following the customer's retirement; where it is known that the customer is being made redundant; or where the firm is aware of another loan commitment that will become due during the term of the regulated mortgage contract or home purchase plan, such as an equity loan to assist in property purchase.(2) If the term of a regulated mortgage contract or home purchase
The following are examples of repayment strategies that may, subject to the circumstances of the customer, be acceptable for the purposes of MCOB 11.6.41R (1):(1) regular deposits into a savings or investment product;(2) the periodic repayment of capital from irregular sources of income (such as bonuses or some sources of income from self-employment);3(3) the sale of assets such as another property or other land owned by the customer; and3(4) for a shared equity credit agreement
For the purposes of MCOB 11.6.2 R, where a mortgage lender is lending under an interest-only mortgage in accordance with MCOB 11.6.41R (1), it may assess affordability on the basis of payment of interest only over the term (plus repayment of such capital as may be due to be repaid over the term). If it does so, it must consider as part of the customer's committed expenditure under MCOB 11.6.5R (2)(b)(i) (or the equivalent alternative provision for transactions with high net worth
(1) This rule applies in relation to all interest-only mortgages which a mortgage lenderenters into on or after 26 April 2014 except:(a) lifetime mortgages7;(aa) retirement interest-only mortgages;7(b) bridging loans; and(c) any other case where the repayment of capital borrowed and, if applicable, interest accrued, is certain.(2) Except as set out in (3), a mortgage lender must carry out a review (as a minimum, once) during the term of the mortgage, in which contact is made with
(1) 8 For any regulated mortgage contract which is not an MCD regulated mortgage contract, a firm may elect to comply with any part of MCOB as if the contract was an MCD regulated mortgage contract. (2) Where the contract in (1) is an MCD exempt lifetime mortgage that is not a retirement interest-only mortgage12, the firm must continue to provide an illustration in accordance with the relevant requirements in MCOB, rather than an ESIS.
8The purpose of MCOB 1.2.16 R is to allow a firm to apply provisions of MCOB which implement the MCD for an MCD regulated mortgage contract to regulated mortgage contracts that are not MCD regulated mortgage contracts, save in respect of MCD exempt lifetime mortgages (other than retirement interest-only mortgages)12 where the firm must continue to provide an illustration in accordance with the relevant requirements in MCOB, rather than an ESIS.
5When a firm issues an illustration for a retirement interest-only mortgage that will be used to release capital, the firm must inform the customer that taking out the mortgage may affect the customer’s tax position and entitlement to benefits, and that the customer should consider taking advice on these issues before applying.
9Where a firm proposes to vary the term of a regulated mortgage contract so that it becomes a retirement interest-only mortgage: (1) MCOB 7.6.18R to MCOB 7.6.21G apply as though references to a rate switch were references to such a contract variation; and(2) MCOB 5.4 applies as though a reference to entering into a home finance transaction included such a contract variation.
(1) 3In considering whether a retirement interest-only mortgage that will be used to release capital is appropriate to the needs and circumstances of the customer for the purposes of MCOB 4.7A.2R, a firm must consider, in addition to the factors set out in MCOB 4.7A.6R, whether the benefits to the customer outweigh any adverse effect on:(a) the customer’s entitlement (if any) to means-tested benefits; and(b) the customer’s tax position.(2) In considering the factors set out in
(1) In relation to a lifetime mortgage2, where the APR is calculated for the purpose of a financial promotion3 it must be assumed that the credit is being provided for a period of 15 years beginning with the relevant date.23(2) In relation to a lifetime mortgage2, where the APR is calculated for the purpose of an illustration, the period for which the credit is to be provided must be calculated in accordance with MCOB 9.4.10 R or MCOB 9.4.12 R.2(2A) In relation to a retirement
2For a retirement interest-only mortgage where, in accordance with MCOB 1.2.16R(1), the firm elects to provide an ESIS instead of an illustration:(1) the ESIS may diverge from the requirements of MCOB 5A where it is necessary to do so to describe a retirement interest-only mortgage, and(2) the firm must also comply with MCOB 5.4.25R, MCOB 5.4.26R and MCOB 5.6.6R as though a reference to an illustration is a reference to an ESIS.
As a minimum the illustration must be personalised to reflect the following requirements of the customer:(1) the specific regulated mortgage contract in which the customer is interested;(2) the amount of the loan required;(3) the price or value of the property on which the regulated mortgage contract would be secured (estimated where necessary);(4) the term of the regulated mortgage contract. If 12the customer is unable to suggest a date at which they expect to repay the loan,