Have you always dreamed of buying a holiday home by the sea or in the mountains, but don’t have enough liquidity to buy it? Don’t worry, even for the purchase of the second home, the lenders offer mortgages on very favorable conditions, let’s see what are the best offers for 2019 and how the loans for the second home work.
The mortgage for the purchase of the second home
When it comes to home loans, it is customary to think about the one signed for the purchase of the first home, but not everyone knows that it is also possible to apply for a loan for a second home.
Unlike the loan for the first home, there are no special concessions and also in order to obtain it you need to meet certain requirements, let’s see in detail what the characteristics of the second home loan are.
The second home loan is usually taken out for the purchase of a holiday home or as an investment to rent it or resell it in the future, but regardless of the reasons that lead you to purchase it is important to know that there are no tax breaks and that the Taxation is much higher than classic first home mortgages.
When we speak of a second home, we generally mean the home where you do not habitually stay, therefore if you already have property, use and usufruct rights on other homes in the same municipality, it will not be possible to apply for a first home loan and benefit from the concessions, but you must compulsorily take out a loan for the purchase of a second home.
Credit institutions, in general, start from the assumption that those who request a loan for the purchase of the second home are in possession of a medium-high income capacity, therefore they apply more restrictive conditions than those provided for the first home loan.
First of all, most banks reduce the LTV, the so-called ratio between the loan amount and the property value to 60% and only in a few cases the percentage is raised to 70%. Second home mortgages are mandatory for a maximum duration of 30 years.
Substitute tax of 0.25% is paid on mortgages for the purchase of a first home, while this percentage rises to 2% for the second home, to which we must add that lenders are used to apply a cost increase of investigation in the case of the sale of second homes.
Some banks, before granting the loan, verify that the installment does not impact too much on the monthly income, establishing that the withdrawal is equal to 25%.
The MyCredit Lender bank second home loan offer
Despite the restrictions, the lack of facilities and the higher tax burden, there are many offers for those who want to buy a second home as an investment.
Among the mortgage proposals for the purchase of a second home, one of the most convenient is certainly the one offered by the MyCredit Lender banking group, to be subscribed exclusively at one of the branches.
There are two different types of mortgage for the purchase of the second home provided by the MyCredit Lender bank: fixed or variable rate mortgage. The fixed rate mortgage is certainly the most convenient and safe option, given that it provides a fixed interest rate of 1.40% and the APR equal to 1.76%.
As we have previously pointed out, the mortgage can be disbursed for a maximum duration of 30 years and in order to underwrite it, it is necessary to stipulate a fire / explosion insurance policy on the property.
The preliminary costs are $ 500, while the cost of the appraisal of the property is $ 211.06. For example, if you want to request a loan of $ 110,000 for a property worth $ 160,000 and to be paid off in 30 years, the monthly payment will be $ 525.76.
If you sign a loan agreement with the MyCredit Lender bank, after 24 months, you can choose between different repayment plans:
- Installment amount: suspend the principal for a maximum of 12 months;
- Move Installment: to move installments of at least three months.
- Reduce Installment: to extend the repayment period up to a maximum of 48 months.
If, on the other hand, you want to opt for MyCredit Lender’s variable rate mortgage, the monthly installment will be slightly lower given that a TAN of 0.58% and an APR of 0.92% are envisaged, therefore if we refer to the example indicated above , the monthly installment to be repaid in 20 years will be $ 485.40 for a loan of $ 110,000, but beware that being a variable rate, it could be modified.
By subscribing to the MyCredit Lender bank variable rate mortgage, you will not have periodic expenses and above all the preliminary costs are reduced compared to those envisaged for the fixed rate.
Second home purchase mortgage loan: the Cream bank offer
Among the mortgages for the purchase of the second home we point out that proposed by Cream bank, a loan that can also be subscribed online.
Cream bank also offers two different types of mortgage for the purchase of the second property: variable rate and fixed rate. In this case, Cream bank’s variable rate mortgage is certainly the most convenient and the lowest cost.
Cream bank has predicted that the maximum amount that can be financed is 70% of the value of the property, a decidedly higher percentage than the other credit institutions (usually it is equal to 60%).
The duration of the Cream bank loan can be 10-25 years with monthly repayment. The variable rate provided for the second home loan is 0.58% in this period, but may change on a quarterly basis, as foreseen in the contractual conditions.
For example, if you request a loan of $ 110,000 for a property worth 160,000 to be paid off in 20 years, the initial monthly installment with the interest rate of 1.42% will be $ 485.40. As with all second home mortgages, it is mandatory to take out a fire or outbreak insurance policy on the property, while the following are optional: temporary and total disability at work, death and loss of employment.
One of the advantages of entering into a loan contract with Cream bank is that the costs for the investigation are completely free and that for the appraisal on the property the cost is only $ 200, even if it may vary based on the fees of the technician commissioned by the lender.
The calculation of the variable rate changes considerably if we consider LTV (Loan to Value) at 50% or 70%, in the first case it will be approximately 0.80% for the first 20 years and 0.99% up to 25 years. If LTV is 70% instead for the first 20 years it will be 0.90% and 1.10% up to 25 years.
Cream bank also offers a mortgage for the purchase of the second fixed rate house, less convenient than the previous one than the variable one: the TAN is 1.42%, while the APR is 1.76%; if we consider the example of the first mortgage, the monthly installment for a loan of 110,000 will be 525, 76 $.
Second Home Purchase Mortgage: advances 2019
In the coming months it is expected that the fixed rate mortgage for the first home of the Intant Care Bank bank will also be available for the purchase of the second home with an interest rate of 1.79% for an amount of $ 50,000 from extinguish in 20 years.
If you choose the Intant Care Bank fixed rate mortgage, you can customize your repayment plan:
- basic plan: installment tax and amount remain unchanged;
- multi-option: the mortgage in the first 3 or 5 years is fixed rate and then you can opt for the variable one;
- balanced: upon taking out the loan, you can choose the portion to be financed at a fixed or variable rate.