You have finally decided to renovate your home and are looking for less expensive financing. In other words, you want an alternative to the mortgage, too expensive to maintain. The first home loan could be the ideal solution because it requires lower costs .
What is the home loan
The first home loan is a form of personal guarantee that is used to purchase a specific good or service, it is normally provided by the banks and is very useful for obtaining liquidity quickly . It is particularly suitable for dealing with minor expenses such as maintenance.
It can also be used to acquire a property if the amount to be paid is less than € 50,000 . The home loan is aimed at employees and but also atypical workers, since too specific references are not fundamental.
Is the home loan cheaper than the mortgage?
The answer is yes, my advice is to evaluate according to your needs. Compared to the mortgage, the first home loan has higher interests but does not impose any mortgage to guarantee the property.
It is also a card to play if you are in a hurry, as the concession times are fast, ranging from 24 hours to 15 days. For the loan you could wait up to 60 days. I know what you're wondering: how long are both of them? The first home loan has a rather short duration while for the mortgage it takes medium to long times, even up to 30 years.
Characteristics of the contract
When you decide to sign this small personal loan, carefully consider all the elements that make up the contract. Do you know what they are? Here are the main ones:
- The number, amounts and expiry of the individual installments
- The annual rate (APR)
- The amount of the charges that are excluded from the TAEG count
- Any guarantees and insurance required
- Interest rate applied
And if I wanted to split the contract, what happens? Well, in this case you can choose to pay off the loan early . However, there are consequences: you must repay the remaining capital and pay a penalty equal to 1% of the loan.
The bank's valuation parameters
We agree, getting a first home loan is much simpler than the mortgage hypothesis. But don't sing victory, don't think you already have it in your pocket.
On the other hand, banks do not trust immediately, before they grant you a loan they need to make their assessments. Credit institutions take into account two main aspects before granting the loan:
- The level of income : before accepting the application, the bank will reserve the right to check the level of your income and on the basis of this will subsequently determine the repayment rate.
- Creditworthiness : the approval of the request is subject to your credit history. The credit institution will make inquiries at the Central Bank of Risks, if you will be a bad payer with outstanding debts it could reject your request. It will almost certainly do so, make sure you have the accounts in order before submitting the loan application. For the banks the magic word is trust .
To sum up: the optimal conditions for accessing the first home loan are: a certain income and a clear credit position.
The bank did not consider you a trustworthy subject and denied the provision of the home loan, what to do in these cases? Is the mortgage out of the question for you? Don't despair because the possibilities are endless, just knowing how to look for them: you can resort to the sale of the fifth : with this funding the evaluation criteria are more flexible.
The sale of the fifth for the purchase of a first home
As you well know, the fifth assignment is a personal loan which consists in the deduction of a fifth of the salary or pension forfeited directly by the bank. If you are a public employee or you are part of a consolidated SRL, the bank can also provide large sums for the purchase of your first home .
The advantages available are many if you have opted for the assignment of the fifth : you will not have to spend sums of money from the notary first of all, because you will only sign the deed of sale so no taxes, fees and registrations.