Do you have to buy a home or renovate a real estate ? If the answer is affirmative, then you must be wondering if you should turn on a mortgage or a loan to finance your home purchase and renovation; we see better to understand what difference exists between the two types of credit products and which form is more convenient, proposing cases and simulations.

In general, the solution favored by the Italians for housing costs is the home mortgage; however, for some time there have been alternative solutions on the credit market: credit institutions offer different types of loans to finance the purchase, renovation, furnishing and maintenance of the building.

Home title loan: features

Home loan

The home loan is a medium-long term product that can be used when the amount needed to purchase a property is small and not very expensive, usually less than about 50,000 euros: it appears to be a valid alternative to the mortgage loan ( as the preliminary investigation costs would be too onerous for the buyer compared to the amount granted).

This type of home loan is suitable for those looking for a low-cost property, or for those who already have the liquidity to be used to purchase the property.

The preliminary investigation is a very slim and fast medium-long term loan practice, so this type of loan is suitable for those who have a certain urgency to receive the money to be used for the purchase or restructuring of the property.

Furthermore, another important difference with respect to the mortgage loan is that the loan does not require the release and the registration of the mortgage on the building as a guarantee: if on the one hand this aspect makes it possible to streamline the preliminary investigation process, on the other hand the lending financial institution to request a higher APR than the mortgage, in addition to the cogency to subscribe additional insurance and surety policies.

Home mortgage: features

Home mortgage: features

Once the property has been chosen, it is necessary to understand which figure to request: generally, for the first home loan, the bank covers up to 80% of the market value of the property , even if some arrive to finance the entire value (we speak in that case of 100% mortgage) in the face of guarantees and higher interest and, this constitutes a difference with the home loan.

However, there are some benefits that the potential subject needs to know in order to assess the convenience in choosing between a home loan and a mortgage loan and are attributable to the following:

  • Discounts for young couples wishing to apply for a first home loan must meet the following requirements: age below 35; total ISEE income not exceeding € 35,000, where at most 50% of the taxable income for Irpef purposes must derive from permanent contracts;
  • Facilitation of temporary workers, who can access certain mortgage offers, taking advantage of any local financial initiatives or requesting additional policies from banks to suspend installments for a set period.