The mortgage loan: duration and coverage of the loan
The mortgage loan is a type of loan aimed at buying a property, usually the first house, used as a principal residence.
This is a loan that provides for the imposition of a mortgage on the property you intend to buy, a solution that allows the bank that provides the loan to protect itself in the event of the insolvency of the borrower. In the event that the applicant is unable to repay the loan with due interest, the bank, thanks to the mortgage, can operate the expropriation of the property, to then resell it and recover the sum lent. On the other hand, offering this guarantee to the mortgage lending bank allows the borrower to access more advantageous forms of financing, such as a lower interest rate.
Furthermore, by offering the house as a guarantee, the mortgage will usually be longer, usually over 5 years. This is another advantage for the borrower, as the amortization plan of the loan (ie time and amount of the capital repayment installments) will be spread over a longer time and consequently the installments will be less heavy.
However, the mortgage will not cover the entire purchase value of the home, but is often around 80% of this value . The mortgage instead can have a value that varies from 150% to 300% of the loan, so as to cover not only the loaned capital, but also the interest payable and those in arrears (those that accrue in the event of delays in the payment of installments ).
In case of transfer of the loan following the sale of the property to another buyer, the mortgage does not lapse and is always linked to the same property. Finally, the law (n.40 / 2007), which introduced numerous innovations in the field of mortgages and loans, provides for the bank to automatically cancel the mortgage, which from that moment on will no longer weigh on the extinction of the mortgage . ‘estate.
Finally, we remind you that the mortgage loan for the purchase of the first home also benefits from some fiscal benefits , above all the deduction to 19% of the interest paid paid on the loan. This means that in the tax return you can recover 19% of the interest you have paid on the loan installments.