rec_55

(55) It is essential that the consumer’s ability and propensity to repay the credit is assessed and verified before a credit agreement is concluded. That assessment of creditworthiness should take into consideration all necessary and relevant factors that could influence a consumer’s ability to repay the credit over its lifetime. In particular, the consumer’s ability to service and fully repay the credit should include consideration of future payments or payment increases needed due to negative amortisation or deferred payments of principal or interest and should be considered in the light of other regular expenditure, debts and other financial commitments as well as income, savings and assets. Reasonable allowance should be made for future events during the term of the proposed credit agreement such as a reduction in income where the credit term lasts into retirement or, where applicable, an increase in the borrowing rate or negative change in the exchange rate. While the value of the immovable property is an important element in ascertaining the amount of the credit that may be granted to a consumer under a secured credit agreement, the assessment of creditworthiness should focus on the consumer’s ability to meet their obligations under the credit agreement. Consequently, the possibility that the value of the immovable property could exceed the credit amount or could increase in the future should not generally be a sufficient condition for granting the credit in question. Nevertheless, where the purpose of a credit agreement is to construct or renovate an existing immovable property, the creditor should be able to consider this possibility. Member States should be able to issue additional guidance on those or additional criteria and on methods to assess a consumer’s creditworthiness, for example by setting limits on loan-to-value or loan-to-income ratios and should be encouraged to implement the Financial Stability Board’s Principles for Sound Residential Mortgage Underwriting Practices.

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Source: EUR-Lex (Cellar) · retrieved 2026-10-11 · Text as adopted (Official Journal); later amendments are not incorporated in this text.