To renovate a home it is necessary to know the difference between a mortgage and a loan , to choose the most convenient and suitable instrument.
Restructuring of a building can put the consumer in difficulty in choosing the best credit instrument to finance them: never as in this case, in fact, it is easy to get confused between a mortgage and a loan, also considering the growing proliferation of mortgage offers and online financing, which can disorient an inattentive consumer.
The loan is a loan aimed specifically at the purchase or renovation of a property, through the use of a real guarantee, often consisting of the house in question. A mortgage is attached to that property, which guarantees the bank repayment of the capital. A home loan, on the other hand, is a purposeful loan, which links the use of the amount received to a specific purpose, namely the renovation of the house. Although there are various mortgage lending options, the first major difference with a mortgage is most often just the absence of a mortgage. It is then always possible to finance the works with a simple personal loan, the use of which is totally free.
Another aspect to take into consideration is that the home loan usually finances small expenses , while the mortgage is indicated for the purchase of the property or in any case for large maintenance and restructuring costs. Furthermore, there is also a big difference in the repayment period: the mortgage repayment period is usually much longer , with even 30-year maturities and beyond.
When you decide to renovate your home with a mortgage or a loan, you must also consider another element: the tax treatment recognized by the State for that loan. The mortgage in fact enjoys important tax benefits: in fact, a 19% tax deduction is applied to the interest paid to obtain the loan, up to an amount of 4,000 euros. This means that it will be possible to deduct a maximum of 19% of an annual expense of 4,000 euros in interest.
This does not happen at all with a home loan, which does not enjoy any favorable tax treatment: the interest is to be paid in full and it will not be possible to deduct it. For this reason we must not only pay attention to the difference between mortgage and loan as regards guarantees and durations, but also consider the different tax treatment .