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Useful information

Useful information for the purchase of a property in Italy Looking for a house takes time, requires attention and a bit of luck, but everything gets easier when you know your own rights, the new laws and the benefits you can count on.

Here are the answers to the most common doubts, a guide for those who want to buy and sell in complete safety.

Bank loan:
  1. I want to buy a house and take a loan out. I don't know whether to choose a fixed-rate mortgage or a variable-rate mortgage: what is the difference between them?
    The variable-rate mortgage is determined in reference to parameters that may change in the course of time: this means that if the interest rate increases, also the loan installment raises and the other way round, when the interest rate decrease also the installment is reduced. The fixed-rate mortgage, on the other hand, remains the same for the duration of the loan: this means that the installment remains constant until the conclusion of the agreement. Choosing between a fixed-rate mortgage and a variable-rate mortgage is up to the borrower who, in any case, bares the risk: in case of variable-rate mortgage the risk is that the price of money considerably increases, causing the increase of the installment; on the other hand, the risk of taking out a fixed-rate mortgage is that the price of money decreases and, as a consequence of that, the interest to pay would be too high if compared to the market.
  2. What is the difference between nominal rate and annual percentage rate (T.A.E.G.)? Which of the two should I consider in the choice of a bank loan?
    The nominal rate is the rate of interest given to the client expressed in percentage on the credit. The annual percentage rate (T.A.E.G.) provides the percentage of the effective cost of a financing. The annual percentage rate considers, besides the nominal rate of the interest, also the burdens that the client bears to make use of the credit. Therefore the annual percentage rate allows to compare on a homogeneous basis the real costs of the loans proposed by the different banks.
  3. What happens if I can't pay the installments of the loan on time?
    Paying late the installments means that you will also have to pay an overdue interest, the rate of which is usually higher than the ordinary one. In addition to that, some contracts have also further costs of credit recovery that need to be added up to the overdue interest. Repeated delays or nonpayment lead to the decay of the term of installments or to the cancellation of the contract due to a breach. This inevitably leads to the forced recovery of the credit through the forced sale of the property in the form of a mortgage.
  4. Are there any penalties in case of early dissolution of the bank loan?
    The borrower has a right, at any time, to terminate the contract by paying off the amount owing for which no interest needs to be paid. The law 40/2007 establishes that, for some issues (as, for example, the purchase or the renovation of the main property), it cannot be stipulated any clause that involves penalties in case of early extinction.
  5. What does "substitution of the loan" mean?
    The substitution of the loan is the early extinction of the old loan by using the capital earned with the stipulation of a new one. In this case the borrower can ask the new bank for an amount even higher than the one of the remaining capital of the old loan. The disadvantage of the substitution, as it is a new contract, is that the borrower must incur all the costs of the stipulation. However, some banks offer the substitution of the loan with no interest charges, bearing the expenses of the preliminary investigation and of the survey.
  6. How does the portability of the loan work?
    The portability of the loan gives the borrower the possibility to replace the lender's credit institution with a new one. The new loan will be used to extinguish the residual debt with the previous bank, the new credit institution takes over the guaranty of the old bank, in particular for what concerns the mortgage. The portability ordains that the amount of the new loan cannot be higher than the residual debt of the previous loan.
Preliminary steps:
  1. The agency asks me to sign an offer to purchase that has to be handed in to the seller. What is it about?
    It is already an habit that, once that one has chosen its own house, the purchaser makes an offer to purchase to the landlord by marking the offered price, usually followed by a check. It is necessary to pay attention because the offer is irrevocable (i.e., for the short span of time indicated in the contract, it is impossible to “go back”) and, when the landlord signs it, the proposal becomes binding. It is good to know that the offer to purchase is not an inescapable choice, it is possible to sign directly the preliminary contract.
  2. What is the preliminary contract?
    The preliminary contract is the contract with which the parts are enforced to stipulate the selling, the basic elements of which are already settled. It needs to be put down in writing, dated and signed both by the seller and the buyer. From now on, it is necessary to turn to your trustworthy notary who will check that the house is, to all intents and purposes, in the possession of the seller, free from any mortgage and other encumbrances.
  3. Does the preliminary contract need to be registered? How much does it cost?
    The preliminary contract needs to be registered to any counter of the revenue service within 20 days of the signature. The broker usually provides for it or, if the notary stipulates the contract, he will also register it. The registration’s cost is 168 euro plus the revenue stamps. It is also necessary to pay the stamp duty at the rate of 3% on the deposit of the price and at the rate of 0,5% on the down payment. These amounts are deductible from the taxes paid at the moment of the registration of the final contract. If the final contract is prone to VAT, the preliminary contract is registered with the payment of the fixed tax of 168 euro and only the 0,5% on the down payment. This last amount will not be detracted at the moment of the final registration.
  4. Is it necessary to copy down the preliminary contract?
    Having signed and registered a preliminary contract do not safeguard the buyer-to-be from unpleasant surprises because the property belongs to the seller until the stipulation of the final deed. Only if the preliminary contract has been stipulated by the notary and transcribed in the real estate registers, the buyer can be sure that, from now on, the property cannot be sold to a third party or struck by the burden of taxation.