A loan is a contract by which a bank (lender) delivers a certain amount of money to a subject (borrower) and the latter undertakes to repay the same amount of money plus the agreed interest over a certain period of time.
In other words, the mortgage is a medium-long term loan, disbursed by a bank or other authorized financial intermediary, repayable according to the contractually established amortization plan.
Mortgages and amortization plans are divided into fixed-rate and variable-rate loans. With fixed-rate mortgages, the customer always pays the same interest to the bank for the entire duration of the loan, while with variable-rate mortgages they will pay based on the monthly trend in interest rates.
TYPES
The mortgages that are described below belong to the category of medium-long term loans secured by a mortgage:
1. Mortgage loan
The category of mortgage loans includes all secured loans in the form of a mortgage, thus also involving liquidity loans or consolidation loans, in addition to land, restructuring or construction loans.
2. Land loan
The real estate loan has limitations compared to mortgage loans, both for the type of mortgage and for the amounts that can be disbursed. The mortgage registered as a guarantee must necessarily be of the first degree and the maximum percentage that can be financed, unless further guarantees are presented (such as a life insurance policy), cannot exceed 80% of the lower between the value and the price of sale of the property subject to a loan request. The belonging of one's mortgage to the category of land mortgages leads to concessions, such as:
– possibility of halving the notary's fee;
– possible reduction in the recorded value of the mortgage as the capital financed through repayments decreases;
– longer times before the bank starts the enforcement action;
– possibility of obtaining the splitting of the loan and the mortgage in the case of subdivision into several units.
BUILDING LOAN
In this case, the mortgage is registered on the building land and will cover the entire property once built, so in the case of the sale of different units, the request for subdivision must be made. As a rule, construction loans are disbursed in tranches and not in a single solution, according to more or less pre-established levels of progress of the works.
This aspect has an impact on higher preliminary and appraisal costs (for the greater interventions that will have to be carried out), it being understood that the financed sum is equal to that agreed in the loan agreement. For the rest, the same considerations apply as for the land loan.
unsecured loan
The unsecured loan is a loan, not supported by a mortgage, which provides for deferred payment installments.
INTERESTS AND ANATOCISM
The interest due following the granting of a loan is divided into compensatory or consideration interest and default interest.
The former (compensatory or considerations) are those that the debtor owes for a sum of money for which a deadline has not been set for repayment.
If, on the other hand, the term for payment has been set but has expired, the creditor, from the expiry of the term for performance, has the right to interest, which is always compensatory, but if the creditor has provided for formal notice, will deal with interest due for the delay, and therefore default interest.
Sometimes, however, it happens that interests produce, in turn, new interests and this phenomenon is called anatocism.
This term indicates the phenomenon of capitalization of interest. This is the application of interest on interest already accrued previously to the detriment of the debtor. For example, on a capital of 100 euros, in a given period, they earn interest equal to 2 euros. The anatocism consists in the fact that if these interests are not paid, they are added to the capital (100 euros + 2 euros) so that, in the following period of calculation in the interests, the interests are no longer calculated on 100 but on 102. And so on from period to period.
From April 2016, Article 120, paragraph 2 of the TUB defines a return to anatocism with an annual capitalization (no longer quarterly). After 60 days, the customer can request interest, choosing whether to debit the current account with the resumption of capitalization or pay off the interest account.
Compound interest is prohibited on interest payments while recently, with the "save banks" decree, it has been reintroduced for default interest that can be capitalised.
The concept of anatocism also finds application in other financial services such as consumer credit, loans, short-term loans, and current account overdrafts.
Recently, for example, a sentence n. 17150 of 17 August 2016 by the Cassation which affirmed the new principles of law in the matter of anatocism and usury in bank contracts.
EXPENSES RELATING TO THE MORTGAGE
Mortgage costs are divided into one-off mortgage costs, which will be paid only once, and recurring mortgage costs, which will be paid over the life of the loan.
The one-off mortgage fees are:
1. Preliminary Expenses: the preliminary investigation is the phase in which the Bank carries out all the actions necessary to establish whether or not the loan should be granted, such as assessing the creditworthiness of the loan applicant or acquiring the necessary documentation. The cost can be determined as a fixed amount, which oscillates between 180 and 300 euros, or as a percentage between 0,1% and 0,5% of the financed amount;
2. Appraisal costs: the appraisal is carried out by a trusted technician of the Bank who ascertains the value of the property but above all that it does not present anomalies or building abuses. The costs vary between 100 and 300 euros;
3. Substitute tax: in lieu of registration, mortgage, cadastral and stamp duty, following Legislative Decree 168/2004, it is required to the extent of 0,25% of the amount disbursed if the disbursing entity is a bank or financial institution equalized and you buy a residential property for which you can take advantage of the first home benefits;
4. Notary fees: they include the notary's fees (to be calculated according to specific tariffs) and the taxes due to the State for the contractual activity (in particular the registration of the mortgage). These expenses vary according to the type of deed, the amount of the mortgage and the lender. Given the variability of the various factors, it is always advisable to request a specific estimate for notary costs;
5. Expenses for early repayment of mortgages: article 7 of law 40/2007 (Legge Bersani) establishes that no penalty is due for the early or partial repayment of mortgages stipulated, from 2 February 2007 onwards, by natural persons for the 'purchase or renovation of real estate units used for housing or for carrying out one's economic or professional activity. For loans granted up to 2 February 2007, the early repayment of the loan was sometimes subject to a commission in favor of the bank. It was an all-inclusive rate having the nature of a penalty imposed on the debtor who asks to pay part or all of the residual capital in advance.
The recurring mortgage costs, on the other hand, are:
1. Collection or Collection Fees and Management Fees: it is common practice to request an installment collection fee for each payment, usually between 1 and 3 Euros. There is also a long list of management micro-expenses, such as the one for issuing the annual certification of interest expense or for sending notices of rate changes.
2. Expenses for Mortgage Insurance: Fire Insurance is compulsory and its total cost depends on the value of the property and the amount and duration of the mortgage. Indicatively for a mortgage of 100.000 euros over 15 – 20 years (the total cost varies between 250 and 400 euros). Also, some lenders may require you to take out life insurance.
