Brexit. Remember that?
I know, it has been a long year, with a lot going on, but as we now head towards 2021 the end of the Brexit transition period is approaching, and change is afoot.
One thing is quite clear is that Brexit is unlikely to directly effect the UK mortgage market. Ironically, back in 2016, a few months before we voted to leave the EU, in the EU referendum of June 2016, the EU credit directive came in to force in the UK, which bought in a wave of significant changes to the U.K. mortgage market. Somewhat adding to the legislative changes that were introduced post credit crunch in 2014 via the mortgage market review. It is our understanding that these pieces of legislation are to be rolled over into U.K. law from EU law and will therefore continue. Albeit in our opinion some of the introduced measure from the European credit directive do not sit with the U.K. processes and as such could easily be dropped as they do not have any impact here.
The main changes will be around how EU nationals are treated for mortgage applications. As we are now approaching the crunch date of January 1st, lenders are starting to release what they require. It is important to remember many EU nationals will have now been settled in the U.K. for decades, and as such will need to be treated fairly as residents here.
Most lenders are only requesting a very slight change to their ID requirements, which will involve applicants providing the evidence they have applied to the U.K. government for the permanent right to reside in the U.K. This can be provided by proving acceptance as pre settled status, on the EU settlement scheme.
I fully understand that Brexit actually happening now may be a stressful time for people living in the U.K. who are EU citizens; especially with the Covid-19 pandemic to deal with at the same time. As someone who is married to a European, it is also something we have been keeping a very close eye on to ensure that there would be no issues moving forward.
I would like to calm any nerves you may have with regards your own mortgage knowing that, whilst not all criteria have been released yet, it is expected that those who do not hold pre-settled status, or permanent rights to reside will now fall into the same criteria as non-EU nationals were underwritten by, pre-Brexit. Plenty of American nationals have mortgages in the UK – many arranged by Mortgage Republic.
Those that do hold pre-settled status will see little to no change in their mortgage applications.
As added confidence, most [not all] lenders will also offer a product switch when your deal comes to an end, enabling you to secure a new fixed rate if appropriate with your current lender.
About the author:
Michael Webb is MD of Mortgage Republic, a whole of market mortgage broker based in Suffolk, and helping clients all over the UK purchase property, invest in buy to lets, and drive down the costs of their mortgage by securing better deals via appropriate remortgage advice.
Michael has also authored 2 books available on Amazon:
A first time buyers guide to mortgages:
The property investors finance manifesto: