Contratti di credito

How to buy a house with no money (or almost no money) in 2024

Is it possible to buy a house without money in 2024? In fact, there are not very many who manage to have a substantial advance to give for the sale of a property, especially due to inflation which has drastically reduced the purchasing power of Italian families.
Evaluating, therefore, whether there is the possibility of being able to buy a house without having money becomes, for many, an essential necessity (also given the rents which in many cases have skyrocketed.
Yet, buying a property without paying large sums in advance or in any case with a limited initial investment is a real possibility, even if many do not take it into consideration.
What you need to take into consideration when you want to buy a house is that even if you resort to a mortgage loan you must be in possession of a good nest egg given that the majority of banks finance a mortgage amount not exceeding 80% of the price of the property.
This means that if you wanted to buy an apartment worth 200,000 euros, the initial outlay would correspond to 40,000 euros, to which all the related expenses would have to be added to the purchase and sale paid by the buyer (on average between 7 and 10% of the price of the house), in addition to the costs of furnishings and any small renovation works.
Due to the insufficiency of this sum of money, for many people, the choice between asking for a mortgage or renting necessarily falls on the second option.
Precisely because of the economic crisis that has been gripping Italy for several years now, there are few who can boast the possibility of having savings amounting to 20% of the value of the house they intend to purchase.
Precisely for this reason the question that many ask is whether it is possible to buy a house for those who have no savings set aside.
For those without money, what are the possibilities of buying a house and what are the possible alternatives for those who do not have a large amount of capital available, evaluating the relative advantages and disadvantages for each of these.
The alternatives for buying a house without money in 2024 Mortgage loan: the 80/20 rule Buying a house with a 100% mortgage First Home Guarantee Fund: how it works Mortgages up to 95% of the price of the property Buying a house with no money (or almost ) 1) Rent to buy 2) Real estate leasing 3) Extension of the mortgage 4) Liquidity loan on another property Rates and expenses to check Mortgage loan: the 80/20 rule Before addressing the topic of 100% mortgages and the alternative solutions for buying a house with little money available, let's see why banks tend to finance sums of up to 80% of the value of the house.
Normally, following a financial commitment on the part of the buyer, who is asked to advance at least 20% of the purchase price of the property, the bank is available to finance the missing amount through a mortgage loan.
The reason why banking institutions do not grant a sum greater than 80% of the value of the property is linked to the fact that they cannot afford a financial risk if the borrower does not pay the loan.
In fact, in the event of insolvency, the bank would find a property to resell without recovering the sums invested or would even have an economic loss, considering that the possible auctioning of the property would require a strong reduction in the value of the property, in addition to the countless costs and interests that the institution would have to bear.
As mentioned, it is mainly young couples and those under 30 who are the most penalized in the credit market.
Often, the lack of a stable job has not allowed these categories of people to save enough money to cover the initial expense necessary to conclude the sale of a house which, as we have seen, usually must be at least 20% of the cost of the property.
Hence the need to obtain a 100% mortgage, which allows you to be financed by a bank for the entire value of the house, even without (or almost) no money.
Naturally it is important that the buyer has the minimum availability to support the initial purchase costs, such as the notary's fee, who in the presence of a mortgage will have to draw up two notarial deeds, so in addition to the deed of sale, the mortgage deed, and a series of other expenses, including registration tax or VAT, bank costs and any real estate agency commission.
Buying a house with a 100% mortgage In certain periods, several banks promote 100% mortgages, especially dedicated to young couples who need to be financed until they reach the full price of the house.
With the necessary insurance protections, a 100% mortgage can be granted for terms of up to 30 years at an interest rate one to two percentage points higher than the market rate.
Compared to the best mortgages of the moment, with fixed rates that are around 4%, even for long-term maturities, those who offer a 100% mortgage apply, as is normal, higher interest rates than those who ask for a loan with LTV (Loan to value) lower than 80%, but it must still be said that these conditions remain favorable.
Suffice it to say that for a 100% mortgage of an amount equal to 200,000 euros, with a duration of 25 years and a fixed rate (optimistically) of 5%, the monthly installment would be equal to 1,169.18 euros.
Obviously an installment that very few people can afford today.
The 100% mortgage is offered less and less frequently by banks, but in 2024, thanks to state guarantees, it is still possible to obtain full financing.
First Home Guarantee Fund: how it works By joining the First Home Fund, established at the Ministry of Economy with the law of 27 December 2013, n.
147 and managed by Consap, banks that grant a mortgage to those who meet the requirements can take advantage of a guarantee which consists in the intervention of the State, in the event of non-payment by the borrowers, to the extent of 80% of the capital up to 250,000 euros, further protecting the banking institution that provided the loan.
But let's remember that this mortgage relief remains in force in 2024 only for those under 36 years of age.
The Government has intervened on several occasions on the specific regulation and with the law of 30 December 2021, n.234, "State budget forecast for the financial year 2022 and multi-annual budget for the three-year period 2022-2024", it has extended until 31 December 2022 the deadline set by the art.
64 paragraph 3 of the Sostegni-bis Decree, referring to the 80% public guarantee.
Finally, the 2024 Budget Law extended the mortgage bonus for young people until 31 December 2024.
The Prima Casa Consap Fund specifically helps those who need to obtain a mortgage and find themselves in a temporary financial situation of difficulty (Isee up to 40,000 euros is required to be eligible).
Mortgages up to 95% of the price of the property.
Few banks are able to finance the entire price of the house and not all of them join the Fund established by Consap.
However, some lenders grant mortgages up to 90 or even up to 95% of the LTC (Loan to cost), i.e.
the percentage of the mortgage compared to the cost of the property.
The main advantage of this type of mortgage is that the rates offered by the institutions very often have a percentage equal to mortgages of up to 80%, but in all cases, the Bank requires the personal and income documentation of the person making the request in order to evaluate the presence or absence of the necessary requirements, including the ability to repay the mortgage instalments.
It should be considered that with today's interest rates, a 25-year mortgage of 180,000 euros (90% mortgage on an amount of 200,000 euros) would entail a monthly installment of 950.11 euros per month.
By choosing a 95% mortgage on 200,000 euros, you should request an amount of 190,000 euros which, again over 25 years and with an interest rate of 4%, would entail a monthly installment of 1,002.89 euros.
Buying a house with no money (or almost no money) In addition to the 100% mortgage, which finances the entire value of the property, and the 95% mortgages offered by some banks, which represent a good compromise between a sustainable initial outlay and a lower interest rate low, it is also possible to resort to other financial instruments, decidedly less known by those who intend to buy a property without a down payment, or simply little publicized by operators in the sector and by the credit institutions themselves.
Let's see them: 1) Rent to buy Literally "rent to buy", or more commonly adapted to the Italian market with the term "rent to buy", it is the ideal solution for those who intend to buy a property but at that moment do not have the availability economical.
With a private agreement registered in the presence of a notary, the seller and the future buyer establish the economic conditions of the transfer of ownership over a given period.
In particular, Rent to buy is a contract which provides that the prospective buyer, in a first phase (which can last from 12 months to 10 years), begins to pay a rent which will be followed by the commitment to pay the established price or alternatively to leave the property vacant.
Generally, the fee includes a non-repayable portion of pure rent and another portion of advance on the future purchase of the property.
The ideal, for the purchasing party, would be to arrive at the end of the rental period in the condition of having advanced at least 20% so that it will presumably be easier to access a traditional mortgage loan.
2) Real estate leasing Since 2016, it has also been possible for private individuals to access real estate leasing for residential assets, and in particular for the purchase of their first home.
This formula allows you to immediately take possession of the home without being the owner.
The bank that grants the leasing will purchase the property on behalf of the future buyer, who will undertake to buy it back before the end of the contract.
This is the same process as leasing cars by companies.
Also with regards to residential leasing, you start paying the credit institution a monthly fee for an agreed period and at the end of the rental contract there is a final maxi instalment, reimbursed which will effectively become full owners of the property.
For real estate leasing, tax breaks are provided for those under 35.
3) Extension of the mortgage Banks which, due to internal commercial policy, cannot intervene to finance a mortgage exceeding 80%, can, in certain cases, ask the potential borrower if there is the possibility of introducing as collateral for the mortgage, in addition to the property being purchased, also another asset, such as a property owned by a family member, so that the mortgage is extended, guaranteeing the bank a greater value real estate and protecting it in the event of failure to repay the loan.
In this case, with the extension of the mortgage, many lenders can proceed with the disbursement of the loan up to 100% of the price of the new property.
An important condition is that on the second property offered as guarantee, at the time of the new mortgage, there are no other mortgages.
4) Liquidity loan on another property As for the solution of the extension of the mortgage guarantee, the liquidity loan can also be granted only on a property free from constraints and mortgages.
In particular, those who have a real estate property, in exchange for a mortgage in favor of the bank that provides the loan, can request liquidity to renovate the same property, or, in certain cases, obtain pure liquidity to support personal expenses.
In the latter case, this sum, within the limits of an amount which usually does not exceed 60% of the value of the property, could be used to secure the purchase of a second property, which naturally has a lower value than the first.
For example, if the property to be mortgaged, even if owned by a parent of the applicant, had a value of 200,000 euros, some banks could grant liquidity of up to 120,000 euros, an amount which could be sufficient for the purchase of another property of the same amount, effectively financing with a 100% mortgage.
Rates and expenses to check When talking about a 100% mortgage, i.e.
buying a house without money, you must consider that not paying any euros in advance is a pure utopia.
In fact, in addition to the price of the property, those who purchase a home have a series of expenses to face, which as we have seen can represent up to 10% of the value of the property.
Buying a house with no money (or almost no money) is possible because it is an operation permitted by law and also promoted by various financial instruments that we have analysed.
However, it is important to carefully evaluate all the consequences of requesting a 100% mortgage.
As we have seen, the rates can be higher than a classic 80% mortgage, and furthermore, it is not possible to download the total interest expense of the mortgage for the entire amount of the mortgage, but only in proportion up to the limit of 80%.
These and other characteristics must be taken into consideration by inquiring correctly, also asking for the opinion of a notary or making use of the assistance of a credit broker who will be able to suggest which bank is best suited to your needs.
There are solutions for obtaining a mortgage above the standard 80%, the important thing is to choose the one that is right for you.

Author: Hermes A.I.

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