Real estate or mortgage leasing?
Perhaps you have already come across some articles that try to explain the differences between real estate leasing and the mortgage. But if you’ve come here it’s probably because you haven’t managed to deal with it yet.
What exactly is real estate leasing that is talked about so much? Okay, you understand it’s a mortgage-like contract. But then, what sets it apart from it? And which suits you best?
Don’t panic! Here we will answer all your questions.
What is real estate leasing?
Generally speaking, one hears about leasing only as regards the purchase of cars or work machinery. As you can imagine, something similar also exists about buying a home. Indeed, of the first house. We already mentioned it in an article on the innovations introduced by the stability law.
With the 2016 Stability Law, the budget committee of the House approved an amendment on property leasing understood as “financial lease of property to be used as a principal residence.”
We’ll let you know right away how it works:
1. You have found the house you want but you don’t have the immediate financial availability to buy it.
2. If this is your first home, you can sign a contract with a financial intermediary who agrees to buy it for you.
3. After paying an initial maxirata, you can use the property by paying a periodic fee to the finance company.
4. Once you have paid the final installment, the house will be your property.
This is, in short, real estate leasing. But now let’s see it in detail.
How real estate leasing works
First of all, know that you can take advantage of real estate leasing both for the purchase of properties already available, and for those still to be built.
After signing the contract with a financial intermediary (authorized and supervised by the Bank of Italy), you will begin to pay a monthly fee, which may be monthly, or quarterly. The figure depends on several factors:
- cost of the property;
- lease rate;
- duration of the contract;
- amount of the initial and final maxirata.
The financing that you will request can also cover the entire amount of the property but, at the time of signing the contract, you will have to pay an initial installment ranging between 10% and 30% of the cost of the house.
The financing period is variable: it starts from a minimum of 8 years to a maximum of 20. If during this period you will encounter serious financial difficulties, such as the loss of a job, you have the option of suspending payment of the payments only once. installments for a maximum period of 12 months. And in the time of suspension no interest will accrue.
After the contract, you can choose whether to buy the house or not. In the first case, you will pay a final installment of a value equal to the sale price less the fees paid up to that time. If you do not want to buy it, the installments will not be refunded.
Now let’s try to understand if the formula of real estate leasing can do for you.
How to tell if real estate leasing is for you
Now, perhaps, it’s clearer to you what we’re talking about. But we bet you are still wondering why to choose this contract rather than a mortgage. In reality, there are cases in which leasing is preferable and others in which, instead, it is not. Let’s see what are the advantages it offers you:
- If you are under 35 and have an annual income of less than € 55,000, you can take advantage of some tax deductions with a lease, such as an income tax reduction of 19%.
- Leasing, unlike the mortgage, can cover the entire cost of the home.
- The initial installment needed to start the loan varies between 10% and 30% of the cost of the property, so it may be lower than that required by a mortgage (30%).
- If the property is purchased directly from the manufacturer, VAT is 4% instead of 10%.
- There are no preliminary investigation fees or mortgages.
- You will pay notary fees only when you decide to proceed with the purchase.
But, as we were saying, leasing is not always worthwhile. If you are over 35 and your income is more than € 55,000 per year, then a loan, with interest rates at historic lows, it may be the best solution.
The loan is preferable even if you want to spread out the installments more over time, so as to obtain lower individual shares. Because, as we have anticipated, the lease has a maximum duration of 20 years.
We hope to have helped you with this post to clear up some doubts. If you want to go deeper into the subject, we refer you to the official guide to residential real estate leasing published by the Ministry of the Economy.
And remember that if you decide to fulfill your dream of buying a home, we can help you make it possible.