Advisory Note: Cross-border mortgages post-Brexit

We have been alerted to an issue that could affect some transactions that are currently in progress when Brexit transition period ends on 31 December 2020.

The relates to lenders who offer mortgages on overseas properties (e.g. a holiday home in Spain) or to British citizens living in the EU (e.g. a buy-to-let mortgage on a UK property for a borrower living in France).

We understand that, whether or not there is a deal to govern future trade between the UK and the EU, UK lenders will not be able to enter into a new mortgage (or vary an existing mortgage) for a borrower in the EU without the appropriate local authorisation and regulation for the country where that borrower resides.

We have seen examples of lenders deciding already to withdraw mortgage offers that could be affected. We have also heard of lenders requiring that the transaction completes before the 31 December deadline.

We understand that for most existing overseas mortgages, borrowers will be able to carry on paying their mortgages, as passive servicing will not require local authorisation (except in a few jurisdictions such as The Netherlands and Slovenia).

We advise conveyancers to check the status of lending on any transaction that could be affected by the end of the Brexit transition period.