Michael McGrath (Cork South Central, Fianna Fail)
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151. To ask the Minister for Finance the rules that exist relating to the purposes for which mortgage-holders can seek to re-mortgage their principal private residence, such as home improvements, critical illness, and so on; and if he will make a statement on the matter. [5927/16]

Michael Noonan (Limerick City, Fine Gael)
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The Central Bank have informed me that no rules exist relating to the purposes for which mortgage holders can seek to re-mortgage their principal private residence.

However, the decision to grant or refuse credit is a commercial decision on the part of a regulated entity and the terms of the individual loan contract entered into by the borrower and lender may specify, as a contractual matter, the purpose or provide for restrictions on the use of the loan monies advanced by the lender.

In addition, the Central Bank's Consumer Protection Code 2012 (the Code) requires regulated entities to carry out an affordability assessment, prior to offering, recommending, arranging or providing a credit product to a personal consumer.

Provisions 5.9 5.15 of the Code relate to assessing affordability of credit.

In the case of a mortgage holder seeking to re-mortgage their principal private residence, Provision 5.15 of the Code is relevant and provides that: -

"A lender must carry out a further affordability and suitability assessment prior to advancing additional credit to a personal consumer, whether by way of a top-up on an existing loan or by a new agreement to provide credit".

Furthermore, the new European Union (Consumer Mortgage Credit Agreements) Regulations 2016 which now apply to any new loan advanced to a consumer which is secured on residential property or has otherwise been provided to the consumer to acquire or retain property rights in land, also places an obligation on the lender to, inter alia, assess the credit worthiness of the consumer.

Therefore, prior to deciding that such an arrangement is appropriate, a lender must complete an affordability assessment of the borrower and only provide credit where the result of the credit worthiness assessment indicates that the borrower's obligations are likely to be met in the manner agreed in the credit agreement.