The loan restructuring
With the home loan, it is possible to obtain liquidity for the main needs concerning the home, including the restructuring loan.
THE LOAN FOR RENOVATION
The loan for restructuring can be requested to finance different types of interventions to the building:
- ordinary maintenance work on the building , or interventions of limited capacity such as, for example, renovation of plaster or new flooring (this is the most frequent case);
- interventions extraordinary maintenance of the building , or works that touch the main elements of the construction (eg the roof);
- works aimed at modifying the perimeter of the building and its appurtenances, such as the extension of the premises or the construction of garages and parking lots (the so-called “major works”).
As with the purchase of a home, requesting a loan for restructuring can be a valid alternative to mutual restructuring. The financing process is slimmer and faster, and neither a mortgage nor a notary is required . There is a limitation on the amount payable of around 50,000 euros.
No specific guarantees are required.
THE ELEMENTS OF THE CONTRACT
The law establishes that a restructuring loan contract must contain the following elements:
- the interest rate charged;
- any other price and condition applied, including the higher charges in the event of default;
- the amount and methods of financing;
- the number, amounts and expiry of the individual installments;
- the annual percentage rate of charge (APR);
- the detail of the analytical conditions according to which the APR can possibly be modified;
- the amount and purpose of the charges that are excluded from the APR calculation;
- any guarantees required;
- any insurance coverage required and not included in the APR calculation.
The law guarantees the consumer the possibility of early repayment of the loan. If the consumer decides to choose this option, in addition to the repayment of the residual capital, he could pay a penalty that must not exceed, by law, 1% of the financed capital; the exact terms of the penalty are reported in the signed contractual conditions.
Below we illustrate in a schematic way some specific evaluation criteria of the restructuring loan.
- Risk policies: each Institute applies its own risk policy in the assessment of requests, based on the statistical data it has (credit scoring). This data is the tool that allows the Institute to keep insolvencies below a certain level.
- Income level: the acceptance of the requests is normally also subordinated to the evaluation of the income level of the applicant and to the relationship between the latter and the possible repayment installment.
- Creditworthiness: the creditworthiness of the applicant is of great importance. It is important to emphasize that this evaluation has no “moral” meaning. The Institutes are limited to estimating the level of risk connected to each request, also on the basis of the indications transmitted by the Central Risks. If the credit history of the applicant has some “flaws” (delays in repayments of previous loans, unpaid debts, etc.) the probability of the request being accepted is obviously lower. In some of these cases a valid alternative is constituted by the Assignment of the fifth: this solution, offering the appropriate guarantees to the financing Institute, allows the adoption of more flexible evaluation criteria.
Restructuring loans are provided by financial institutions and banks. They do not require specific requirements, except for a certain income and a credit position of the applicant for the loan which confirms adequate financial reliability of the same.