Change house or renovate your own? A question to ask yourself before deciding whether to seek a restructuring loan for first home or a mortgage restructuring. Choice that in turn is conditioned above all by the type of work to be carried out and therefore by the overall expenditure to be incurred. Let’s see what are the various points to consider to find the best solution according to your needs.
How much will I have to spend on jobs?
It is quite clear that without having a quote from one or more companies in hand that will then carry out the work, you cannot have a precise idea of the amount of the expense to be incurred for the restructuring. We immediately highlight how for the modest figures it will be quite difficult to have the possibility of being able to apply for a restructuring mortgage, and where possible, great attention should be paid to ancillary costs. The latter can in fact make small loans at low rates in any case not very convenient, or rather less convenient than a normal loan.
If, on the other hand, the expense is substantial, it may be less expensive to go through the request for a restructuring loan, especially for the sustainability of the installment, which by choosing long amortization plans (less likely for a normal loan) tends to be more contained (but you will have to however, pay attention to the amount of extra interest that will have to be repaid). This discourse partly loses importance in the case in which it is possible to choose (having the necessary requisites) the first home renovation loan Inpdap, or the institution ‘s mortgage with the same purpose, since the rates tend to still be very content.
The difference in rates
A first home renovation loan will have higher rates than a mortgage and you will lose the option of tax deduction. However, the absence of the notary’s intervention and the registration of a mortgage can compensate for these aspects, so you have to have patience, compare the different estimates, considering all the expenses that will have to be incurred, and make the assessment on the global rates.
You must also pay close attention to how the loan is disbursed, for example if it involves direct payment to the company, or as a transfer to the applicant’s account. A fundamental aspect when it comes to renovation works that allow access to the tax deduction: the payment methods will in fact make a big difference for the acceptance or otherwise of the request for deductibility.
To overcome these problems and be on the safe side, specific loans offered by some banks can be used, many of which can also be used to improve energy efficiency.
The weight of ancillary costs
As already mentioned, for a restructuring mortgage there must be the intervention of the notary to which must be added:
- the costs of appraisal;
- stamp duty;
- annual management costs;
- initial investigation fees;
- the fire and burst insurance policy, etc.
In the case of a first home renovation loan, insurance is normally not mandatory, the notary does not intervene and no appraisal costs are foreseen. However, the assessments of the weight of the accessory costs linked to the loan or loan must also be assessed on the basis of the duration of the amortization plan for the repayment of the entire sum, a speech that also involves any early repayment penalties.
The timing of a first home renovation loan on average is shorter than that of the “office workers” for a mortgage. If the solidity of the applicant’s income guarantees were the same, however in the case of the mortgage, the time linked to the appraisal must be counted, starting from those related to the assignment given to an expert up to those of drafting the appraisal and its delivery to the bank (which on average takes no less than 7 days in total).
So if in the case of the loan you can get the sum within a few days, in the case of the mortgage necessarily several weeks pass, until you reach times that can even touch the two months to have the money in the account or to pay the advance to the firm that will carry out the work, etc. In conclusion, in case of tight deadlines, the mortgage could be the least viable solution.
For a loan, including a restructuring loan, the guarantee is normally linked to the income and property situation of the applicants. In the case of a restructuring loan, there is normally a real guarantee of the registration of the mortgage in addition to the income one. So in the first case there is less bureaucracy even in the event of early repayment or regular repayment, while in the second case the process is a little more complex.
The obligation of the current account
For some years now, one cannot be obliged by law to open a current account with the bank that provides a mortgage, while this “protection” does not exist in the case of loans. It is no coincidence that some Institutes offer a restructuring loan only to their account holders (other requirements such as crediting the salary, and cc) are often added. So if you do not want to change the account with your bank, then you need to get informed in time and evaluate any limitations in this regard.
If you need large amounts, choosing a mortgage instead of a loan may become mandatory. In a normal loan the maximum duration reaches 120 installments for repayments (in exceptional cases it can go up to about 180 installments), while with mortgages it can go up to 360 installments. However, there is also to consider that for high sums, mortgages normally use the SAL method (work progress with payments by the bank in tranches).
A distinction must be made between the one due for passive interests and the one on the type of restructuring work carried out. In the case of a mortgage on the main home alone, the deduction of interest expense is also due (rate of 19% on a maximum amount of interest expense of $ 2,582.25).
As regards the costs incurred for the restructuring, these are deductible for both types of financing according to current legislation, within the maximum established threshold and to an extent equal to the rate applied in the tax year.