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Directive 2014/17/EU on Credit Agreements for Consumers Relating to Residential Immovable Property
Article 1: Subject Matter
This Directive establishes a common framework for laws, regulations, and administrative provisions of Member States concerning credit agreements for consumers secured by a mortgage or related to residential immovable property. It includes obligations for creditworthiness assessments before granting credit, aims to develop effective underwriting standards, and sets prudential and supervisory requirements for credit intermediaries, appointed representatives, and non-credit institutions.
Article 3: Definitions
Definition (g) – Total Cost of the Credit to the Consumer: This encompasses all costs the consumer is required to pay in connection with the credit agreement, known to the creditor. It includes interest, commissions, taxes, and other fees, excluding notarial costs. Additionally, it covers costs related to ancillary services, such as insurance premiums, if obtaining a service contract is mandatory to secure the credit or to receive it under advertised terms and conditions.
Article 4: Definitions
Definition (13) – Total Cost of the Credit to the Consumer: Mirroring Article 3(g) of Directive 2008/48/EC, it includes all costs associated with the credit agreement known to the creditor, such as valuation costs necessary to obtain the credit. It excludes registration fees for transferring ownership of the immovable property and charges for non-compliance with the credit agreement commitments.
Article 14: Pre-contractual Information
Paragraph 1: Member States must ensure that creditors and, where applicable, credit intermediaries or appointed representatives provide consumers with personalized information necessary to compare available credits, assess implications, and make informed decisions. This information should be provided without undue delay after the consumer discloses their needs, financial situation, and preferences, and sufficiently in advance of the consumer being bound by any credit agreement or offer.
Paragraph 2: The personalized information must be delivered on paper or another durable medium using the European Standardised Information Sheet (ESIS) as outlined in Annex II.
Article 25: Early Repayment
Paragraph 1: Consumers have the right to fully or partially discharge their obligations under a credit agreement before its expiration. In such cases, consumers are entitled to a reduction in the total cost of the credit, which includes the interest and costs for the remaining duration of the contract.
Paragraph 2: Member States may impose conditions on exercising the early repayment right. These conditions can include time limitations, different treatments based on the type of borrowing rate or the timing of exercising the right, and restrictions related to the circumstances under which the right can be exercised.
Paragraph 3: Member States may allow creditors to claim fair and objectively justified compensation for costs directly linked to early repayment, provided it does not exceed the creditor’s financial loss. Additionally, Member States can set limits on the compensation amount or the period during which it is allowed.
Paragraph 4: Upon a consumer’s request to prepay, creditors must promptly provide necessary information to consider this option. This information should quantify the implications of discharging obligations early and clearly outline any assumptions used, ensuring they are reasonable and justifiable.
Paragraph 5: If early repayment occurs during a fixed borrowing rate period, Member States may require the presence of a legitimate interest on the consumer’s part to exercise the early repayment right.
Additional Provisions
Recital 15: Emphasizes the Directive’s goal to ensure consumers entering credit agreements related to immovable property receive high-level protection.
Recital 50: Details what constitutes the total cost of credit, reiterating the inclusion of known costs like interest and commissions while excluding notarial fees and registration costs related to property purchase.
Recital 66: Highlights the importance of allowing consumers the flexibility to repay credit early, promoting competition and financial stability. It permits Member States to define the conditions under which early repayment can occur, including time limitations and differing treatments based on borrowing rates or specific circumstances.[:]
