Mortgage loans in Italy and a residential financial analysis Essay

Mortgage loans in Italy and a residential financial analysis - Essay Example One of the main strengths of the Italian housing market is, according to a 2001 census, a very high rate of ownership which sits around 71% and the residences where people live account for about 60% of Italians net wealth.3 One of the advantages of getting a mortgage loan in Italy is the fact that the Euro, at the moment, is a very strong currency as this offsets the facts that the mortgage rate in Italy is a little higher than in the United States or England.4 There are legal issues that must be dealt with in securing a mortgage loan and owning property in Italy. A reservation must be signed once you have found a property that you would like to purchase which is a legally binding agreement that obliges both parties to complete the purchase of real estate by a specific date in an office of an Notary Republic.5 After the reservation is signed there is a mandatory deposit that must be put down which ranges from 10 - 30% which you do not return if you pull out of the deal but conversely if the vendor pulls out of the deal they must pay two times the amount that was agreed upon as the deposit. 6 When the real estate deal is completed the deposit is counted toward a down payment. The buyer must state that the purchase of the property is conditional on the buyer receiving a mortgage, a satisfactory survey, and that the property in question is in compliance with building regulations free from all charges as the buyer must check what legal fees and local government taxes might be associated with the purchase before re-mortgaging or purchasing. 8 The real estate deal is complete once this process is formalized by a sale deed written by a local notary who then registers the deed with the land registry as well as pays all the taxes incurred on behalf of the buyer.9 There are Italian solicitors that are available for much of this legal work as they generally charge 2% of the purchase price of the property as some of their duties include drawing up of contracts, contacting the relevant notary for such documents, payment of taxes and registering the property. 10 Notary fees differ on the price as they generally charge a higher percentage on less expensive properties as the average fee will be around 4% of the declared price of the property.11 Foreign citizens must also receive a tax identification number codice fiscale through any Italian financial office or an Italian Embassy.12 This document is important for: Signing the preliminary purchase agreementRequesting bank financingOpening bank accountsConcluding the final purchase agreement with notaryPurchasing an automobile Arranging public utilities contractsPresenting declarations to public offices , whether communal, regional or state13 The time value of money is used as the base for all ideas in finance as it has a direct impact in business, consumer, and government finance as the time value of money derives for the concept of interest. In the terms of the time value of money one dollar today is the same value as a dollar in three years time but where it differs is the money that could be made by investment and gaining interest over a period of time from when you first receive the money. If you receive 10,000 dollars today you