Tied mortgages to be banned under European mortgage directive.

Tied mortgages such as the one offer by Lloyds called the Lend a Hand deal, could be banned by new proposals outlined in the EU mortgage directive.

Recently the European Monetary and Economic Affairs committee or ECON for short, voted in a various proposals on the EU mortgage directive.

One of the proposed clauses states that mortgage lenders should no longer be permitted to sell mortgages linked to a savings account, if the savings account is used for any other purposed than to repay the mortgage.

Deals like the Lloyds Lend a Hand, which states a 5 per cent deposit is needed with a further 20 per cent in savings as security for a deal would no longer be allowed.

Vicky Ford who is a British MEP involved in the voting, is now campaigning to get the proposals amended as tied saving-linked accounts do not work in the way outlined under the proposals.

The EU mortgage directive if passed in its present form, could damage an already fragile economic recovery. The property market is in a weakened state and a directive which limits mortgage lending could damage it further.

While the directive aims to limit risky lending and protect borrowers, it could unintentionally limit the help that is being given to first time buyers through the withdrawal of savings linked products.

UK property buyers are already being impacted by rising mortgage rates and a restriction in lending. Further restrictions to mortgages could make it virtually impossible to purchase a first time home.

If you are looking for mortgage advice or would like a competitive mortgage quote, contact Deal Direct now.