How many times have you asked yourself which bank would have granted you a low-interest loan for the purchase of your first home, shop or office to start your business or profession? Do you remember when you knocked on the door of your bank that you thought was trustworthy, with which you had your current account and those of your children? Not only that, but did you also recommend it to your friends, relatives and colleagues, believing blindly that it offered the most advantageous products on the market? Later, in reality, it turned out to be a total disappointment, because you realized that you were filled with empty talk and persuasive words: advantage, convenience, unique opportunity, savings, facilitation, economic.
Subsequently, after concluding the contract you learned, thanks to an advertisement seen on TV, that more than one competing bank applied lower rates than those applied by yours. You will surely be upset! So bad that you think of going back to the branch office, talking to the official or consultant to tell him four and transferring the loan to another bank. If you have not done it is because you have common sense and it seemed to you, despite everything, not very polite to come back to the bank. Then you need to know that you can do it! Read below how to do it.
How to transfer your mortgage or change the conditions
You can at any time transfer your mortgage to another bank without additional costs and without losing any tax breaks whenever the conditions of the new bank are more favorable for you. How? Exercising the “subrogation by will of the debtor”, better known as mortgage portability or mortgage portability. ( I talked about it in detail in the article dedicated to the subrogation of the loan ). Here I want to talk to you about how to avoid falling into the scam again, in the persuasive scam, in the marketing strategies developed and finely studied by the marketing and communication area of your credit institution.
Take your time, evaluate, compare budgets, ask the different banks for more advice, let them do more simulations, get more tax relief on the fees paid to be included in your tax return for the purchase of your first home, and only then make your decision. Pay attention to two commercial practices that banks usually use.
First practice adopted
In fact, you will have to go to the bank and talk to a consultant who informed you on how to grant the loan, setting as a condition for its stipulation also the opening of the current account with them. In this case you need to know that you are free to keep your current account already active at a different bank without being forced to have to open a second account that serves as a support account to make payments on the loan installment, without going to the counter. It would be superfluous since this function is already largely fulfilled by your current account already in use. It is possible to have the account with a bank other than the one with which you entered into the loan agreement. If the bank refuses to grant you the funding, you must provide in writing the detailed reasons that led it to reach a decision so abrupt, you can also be protected by having recourse to the Banking and Financial Arbitrator.
Second practice adopted
The second commercial practice that often requires the bank is to force you to choose your own insurance company on the mortgage . These commercial practices have been defined as incorrect by the art. 20 of the consumer code prohibiting their use, and misleading by art. 21 falling precisely between deceptive actions and by art. 22 misleading omissions of the consumer code. This last article reads as follows: “A commercial practice is considered to be misleading, which in the specific case, given all the characteristics and circumstances of the case, as well as the limits of the means of communication used, omits information relevant that the average consumer needs in this context to make an informed decision of a commercial nature and induces or is likely to induce the average consumer to take a commercial decision that he would not otherwise have made. “
In light of what you have read so far, let us see together which mortgage is suitable today for the purchase of a first home.
How to transfer the loan from one bank to another when the conditions change?
One way that allows you to change banks even if you have a mortgage contract with it, is the mortgage subrogation , otherwise called a mortgage subrogation, which offers the possibility to the client, who has stipulated a mortgage loan contract with a bank, to move to another bank that guarantees better conditions without additional costs.
It is also called portability of the mortgage, or rather the portability of the mortgage, which allows the mortgage to be interrupted and separated from the old mortgage, which will be extinguished with the provision of the new loan, therefore called the purpose loan, and combined with the new loan, stipulated on more favorable terms.
For further information, refer to the following links:
Fixed rate or variable rate mortgage?
The official will ask you the following question: “which interest rate do you prefer?” In general, there is no single answer, otherwise only mortgages with a specific interest rate would be stipulated. To assess the convenience of one rate over another, the following elements must be taken into consideration:
- cost of money, or the “price” that the bank is willing to pay to borrow money from both the ECB and other banks.
- spread of the Bank, it is an additional value that the Bank applies to repay its work. Represents the negotiating part of the rate, on which you can come to an agreement, in fact if you manage to get it lowered, you will have a more convenient starting point regardless of the rate you choose.
- commissions for the preliminary investigation of the loan, even in this case the bank can facilitate you by reducing them.
- interbank rate, Eurirs to assess the performance of fixed-rate financial transactions entered into with banks and financial institutions.
variable rate indicator, Euribor.
Differences between the two types of rates
Fixed rate, you can request that the interest rate for the duration of the loan be constant, ie not change. In this way, when you enter into the contract, you will have the guarantee that the monthly installments, the percentage rate, as well as the residual amount of the debt to be repaid will not change due to fluctuations in the conditions of market, but remain fixed and constant for the duration of the loan. The only disadvantage is that you will not be able to benefit from any reductions in market rates and savings conditions resulting from lower rates and consequently from the reduction in the installment amount. The fixed rate loan is linked to the EURIRS which is currently 1%.
variable rate, this rate is characterized by unpredictability because it is affected by changing market conditions.
Two conditions can occur: the t is reduced as a function of events and events in the market trend, or increases considerably ; this means that the amount of the installment or the number of the same increases, with the result that you will be able to pay your installments with considerable sacrifices.
The variable rate mortgage is linked to the EURIBOR which currently has a negative value, and has continued over the years, after the economic crisis, to record a decrease and has come to -0.28, otherwise it was 4% previously. Considering today’s economic and political situation, the rate that is more convenient for the two is variable because the low interest rate saves on the monthly payment. In fact, in the first few years of the loan when you will only have to bear the cost of the interest, you will realize the opportunity. Furthermore it is right that you know that both rates can be renegotiated over the years through the loan subrogation.
How does the loan for the purchase of a home or building work?
Today on the market there are types of mortgages that offer the possibility to those who are interested and to possess certain requisites to obtain the total coverage, or 100%, of the cost incurred for the relative purchase. They are medium-long term loans of the same value as the house to be purchased. If your home has been estimated at an amount of 200 thousand euros, the bank will finance you for this value; which corresponds to 100% of the total cost. The interest rate can be either fixed or variable.
What are the requirements to be able to benefit?
The interested parties who can use them are:
- households living in economic poverty.
- young couples who want to buy their first home and live together.
- those who have not exceeded the required age limit of 35 years.
- separated single parents who have minor children.
- those who are under the age of 35 and have no job stability.
- who lives in a housing of social housing.
What limits are set for the granting of the loan at both fixed and variable rates?
The essential element that must not be missed when requesting a mortgage is the state of need and need of the citizen who wants to access the mortgage for the purchase of the first home. The first house must be a civilian home. Furthermore, in order for the loan to be granted, the following limits are provided:
- the value of your home must not exceed 250 thousand euros.
- if you already own other residential properties it is not good, except those that you may have inherited.
- it is not permitted to purchase a home located abroad.
- the purchase of a stately home, villa, buildings of artistic and historical value is excluded.
Useful advice for you
The bank provides the citizen with a service with which you can know in advance the amount of the loan that will be granted to you. It is sufficient that you request it to allow the bank to issue you with a letter in which you will be given the amount of the loan before you even buy the house. It is mandatory that you go to the bank, deliver your personal and income documents, so that your personalized case will be processed and you will also be issued a Mortgage Voucher which is valid for 6 months.
However, for the reasons given above, for deceptive or unfair business practices that you may encounter, I advise you not to go to the bank immediately to deliver the documents, rather inform your independent financial advisor and ask him for advice.
If you want we can do a simulation together using the bank platform, accessing your personal area with your credentials and having a customized simulation suited to your needs. So when you go to the bank later you can make a comparison on equal terms. Together we will evaluate the opportunity of fixed and variable rates, taking into account the current economic, political and financial situation.