Home Loan Guide: An Alternative to the Mortgage?
Usually when we are ready to buy a house we use a mortgage loan: however, there are alternative forms of financing such as a home loan, which in some cases could be even cheaper.
What is it about?
The home loan is a loan, which uses depreciation at French, fixed rate (it is the formula most used by banks) or variable (it is not common but still possible today). The duration of the repayment plan tends to be quite long, but it is difficult to go beyond 120 months (10 years) while the minimum duration tends to start around 36 months.
Despite the property to be purchased is a property and therefore subject to mortgage, in the home loan there is a tendency to use the ‘ unsecured ‘ type (therefore with the guarantee of the applicant’s financability based on income). The minimum thresholds for requesting it tend to be also quite low (starting on average from 5 thousand euros) while for the maximum ones it is difficult to exceed the threshold of 100 thousand euros.
Finally, as regards the purposes for which it may be required, there is a great deal of difference between the choices of the various banks that propose this type of financing, being able to include not only properties for residential use, but also land (agricultural or building land), garages, garages, warehouses, etc.
When is it more convenient than the mortgage?
If we consider the home loan on the level of mere economic convenience, the simple financing rate applied to the operation, usually a mortgage loan, has lower values.
Let’s try to analyze the ‘typical’ economic conditions of the two alternatives in a medium or long time horizon (over 3 years) in order to evaluate their adequacy based on their needs. Let’s start with the advantages of loans:
- the stamp duty at 0.25% applies to the mortgage in the case of a first home but not to loans;
- it is not necessary to contact a notary with an average saving of 4 thousand euros;
- fire and explosion insurance is compulsory only in mortgages (with the beneficiary the bank granting the loan), while in the case of loans it can be optionally entered and the beneficiary will be financed.
As for mortgages instead:
- the deductions of the interest payable for the first house are possible only on the mortgages and on the residential leasing (which however is only a very particular form of ‘home loan’);
- the average rates applied on a loan tend to be higher than those applied on a mortgage;
- you have access to generally longer durations that allow you to reduce the amount of the installment by acting on the length of the amortization plan that can arrive in the case of mortgages on average even at 35 years (against the 120 months of the loans).
Given these economic assessments, we must also consider that both solutions may not always be accessible. In particular, as regards the mortgage, there are some ‘limitations’ that we can summarize in the following cases:
- mortgages require minimum thresholds to be able to be requested quite high (there are some exceptions such as Melow! Melow bank loan, but this is a very special case). On average the minimum amount is around 30 thousand euros;
- loans can also be requested in those cases for which there are no conditions to proceed with the registration of a mortgage to guarantee a loan, or when the amounts are such as to advise against the typical costs of a mortgage;
- the type of property to be purchased does not fall within the scope of the request for a purchase loan, restructuring, etc.
Requirements to get them?
In the case of home loans, the same ‘criteria’ are not required as for the typical conditions of a mortgage, while it is important for the applicant to have a sufficient income and a solid capital position (that is, it must not have excessive exposure to the property). debts) as well as a good credit reputation.
Who to contact?
Today almost all banks offer two or more home mortgage alternatives, while on the home loan front the possible offerors are still few in number. So it should not be taken for granted that the bank that offers a mortgage also offers the alternative of a home loan, but you have to get specific information on a case-by-case basis. Among the banks and financial companies that offer at least one home loan solution, we can for example report the following cases (the list is not exhaustive but is only an example):
The solution proposed by OneCash is called Cash mate , which allows you to request a sum ranging from 5 thousand to 100 thousand euros, with the application of the fixed rate only, and a duration ranging from 36 monthly payments up to 120 installments as a maximum. Purchasable goods can be not only houses but also land. For amounts under 30 thousand euros, it is enough to have a Genius Card to repay the installments, otherwise there is an obligation to have a normal current account for the permanent repayment of the repayment of the installments.