Mortgage and bank loans

With a loan, a lender (generally a bank) transfers an amount of money to a borrower, who undertakes to pay it back (generally in instalments) and to remunerate the loan paying interests on it.

Often the obligations of the borrower of a loan – and of a financing agreement in general – are guaranteed by a mortgage granted on real estate owned by the borrower himself or by a third person, but they can also be guaranteed by a pledge on securities (e.g., stocks) or by personal guarantees brought by a third person.

The loan agreements are generally prearranged by banks; the Notary, if so requested by the borrower, may check their content so as to make them more easily understandable, to identify and suggest solutions that better fit the parties, or to delete clauses which may bear unwarranted contractual imbalances.

Close attention should be given to an essential point. The stipulation of a loan agreement is not always accompanied by the concrete availability of the money: sometimes the banks retain the amount until the mortgage guarantee is definitively acquired, which, concretely, could even mean two weeks after the stipulation. The point deserves to be stressed since often the borrower needs the money to be immediately available, so as to pay the seller for the house that is simultaneously offered to the bank as guarantee. A possible remedy consists in obtaining a pre-financing loan from the bank which covers the time period from the conclusion of the agreement to the consolidation of the mortgage, but not all banks are willing to offer it.

Finally, it must be remembered that:

• According to article 15, first paragraph, lett. B) of the ‘Consolidated Text of Laws on Income Tax’, it is possible to deduct 19 percent of interest paid for mortgage loans from income taxes, for an amount up to 4.000 Euro, provided that said loans are stipulated for the purchase of real estate to be used by the purchaser as their primary residence. The purchase has to be performed during the year preceding or following the stipulation of the loan and the house has to be destined as the primary residence of the purchaser within one year following the stipulation.
• According to article 120-quarter of the Consolidated Text of Bank Laws, the lender bank may be substituted with another one, if the borrower obtains from the latter better conditions for the same loan. All the costs of the mentioned transaction must be borne by the new bank.