The second home loan is a form of financing that is granted by the bank when you want to buy a property that does not represent the main home or residence.
Usually, this form of financing is required for the purchase of a house by the sea or in the mountains or when choosing to make a real estate investment. This type of mortgage is also necessary whenever the house you intend to buy – although first home – is a luxury property.
Buying another home with a mortgage is very expensive, moreover the bureaucratic obligations are more complex and the taxes are more expensive. When you buy a second property, you cannot access the facilities reserved for the purchase of the first home and indeed you must also pay a higher substitute tax. In addition, the bank in these cases finances only 60% or at most 70% of the purchase price of the property.
In any case, if you want to have another home and the taxes imposed do not scare you, then this guide on how this form of financing works, can give you some information that will surely come in handy.
How does the second home mortgage work?
The first thing you need to know when applying for a second home loan is the way banks go. In general, these are much more attentive to the applicant’s income and internal procedures provide for more restrictive access to financing requirements. First of all, as I have already mentioned, the maximum amount obtainable through this is 60% calculated on the purchase price of the property. Furthermore, the repayment times are also somewhat lower, some banks provide for the repayment of the mortgage within a maximum of 15 years, few lenders reaching 20 years of age.
As regards the income requirements, the bank usually prefers that there are no other mortgages or loans in progress, or in any case that the impact of the installment on the monthly income is less than 25%. As for the financial availability, the bank grants the loan only to those who have an above average salary (above 1200 USD) or only if other guarantees are given, such as the mortgage on the first property owned.
Finally, as with all loans and loans, of course it is not possible to access the second home loan in the event of protests, foreclosures in progress, or if you have reported to the CRIF.
The second home mortgage, like other forms of financing, still provides the possibility to choose between the fixed and the variable rate. The fixed rate provides for higher interest rates, on average these are around 2% for the Tan and around 2.50% for the APR. The variable rate mortgage, on the other hand, has more advantageous interests, in this case on average the banks offer a 1.50% Tan pai while the APR is approximately 2.10%.
Purpose: What is the APR
First and second home mortgage: what are the differences?
The first home and second home mortgage, as we mentioned initially are different from each other. The main difference concerns the costs, as a loan for the secondary home has more expensive costs and also the taxes that will have to be paid on the property will be higher.
Why does the first home loan have greater benefits? According to the Italian State, having a main home is a right for all citizens. So to facilitate families to grow and create a stable environment, banks obtain subsidies, which they then use to facilitate the purchase of the first home for young people, or even for those over 35. Those who buy their first home (not luxury), it is not subject to the substitute tax, the notarial deed has reduced and facilitated costs and also the annual taxes are lower, as IMU is not paid and TARI provides for a reduced amount.
Those who buy a second home, on the other hand, will first have to pay the Registration Tax at 9%, instead of 2% as for the first, the purchase transactions subject to VAT the rate to be paid will be equal to 10% instead of 4%.
Interest rates are usually higher than those imposed for the first home loan and the duration of the loan is also reduced, so you have to repay the debt in a shorter time. The investigation costs are also higher, in fact, when you buy a second home, the cost of the technical appraisal increases, as well as the bank charges that usually in the case of second-rate mortgages at variable rates, are calculated as a percentage based on the amount financed.
How to choose the best mortgage
The second home loan can be requested from all banking institutions operating in Italy. But how to choose the best one? As planned for the first home, some sites and platforms related to the banking institution offer a mortgage simulation program.
The simulation lets you know what the monthly installment to pay and what the interest rates will be applied. To get a more truthful estimate, however, it is advisable to contact the banks directly, in this way you can get a truer overview of the costs to be incurred and the monthly installment to be paid to repay the mortgage.