Second Home Loans: loan installment calculation and preliminary investigation fees

Woman taking batch of hundred dollar bills. Hands close up

If a person is already in possession of a first property used as a principal residence, nothing prevents him from buying a second one and that for this second property he has the possibility of requesting a special loan from a bank.

Surely, however, the conditions under which the loans on the second home are subject are definitely less convenient for the borrower than those for the purchase of the first property. The first important difference lies in the fact that the loans taken out for the purchase of a second home are not subject to any kind of tax relief or tax deduction.

This is what was established by law n. 220 of 2004, which established the formal differences between the concept of first and second home. The second house may not even be located in the municipality of residence of the applicant, for example take a house purchased in a holiday resort. 

Second home is also a property in which the applicant does not intend to move within the eighteen months from the request for the same loan.

Second home is also a property in which the applicant does not intend to move within the eighteen months from the request for the same loan.

Both of these conditions, on the other hand, are essential for obtaining the benefits of a mortgage on your first home.

If a person intends to request a loan for the purchase of a second home, it is good to know that the rates for cadastral, registration and VAT taxes will be applied in their maximum percentage. In addition, the substitute tax for mortgages on the first home stands at 0.25%, for mortgages on the second house it comes to correspond to 2% of the financed capital. This expense item is also attributed to mortgages for the renovation of a second home, as well as for the purchase.

The categories of properties for which you can apply for a mortgage as a second home are usually luxury homes, such as large apartments or luxury villas of large sizes that also have options such as swimming pools or playgrounds. Therefore, before granting a loan for this purpose, the credit institution will ask the borrower to provide documents that describe in detail the characteristics of the building in question.

Obviously, in addition to this type of specific documentation, the bank will request the normal ritual documents that are required for any type of mortgage, ie personal, capital and income.

A second home mortgage could be requested by more than one person, and in this case it would be jointed. In a hypothesis of this kind, if at least one of the applicants has the requisites necessary for a mortgage on the first home, the taxes and fees will be calculated proportionately. For example, if two brothers decide to apply for a loan of 100,000 euros for the purchase of a house and for only one of them this house represents the first home, for half of the amount requested the rate of 0.25% will be applied while for the other half the 2% rate will be applied.

MAIN MORTGAGE CHARACTERISTICS SECOND HOME

– Amortization plans varying between 5 and 40 years.
– Possibility of choosing the type of rate as indicated in the articles below
– Monthly or six-monthly installments
– Maximum installment allowed without guarantor equal to 40% of the net income of the applicant.
– No complaints, bad payers reported in data, foreclosure in progress.