Mortgage in the name of a person other than the owner: what to know — idealista/news

It is possible that the mortgage is registered in the name of a person other than the owner? This is a very common option, especially in the family context: think, for example, of parents who decide to put the financing for their child’s house in their name.

Generally, if the owner has a solid income position, banks do not oppose this solution. However, it is always useful to use online tools to find the best mortgage for your needs.

Does the person who takes out the mortgage have to own the house?

To understand when it is possible to register a loan in the name of a person other than the owner of the property, it is first necessary to answer a common doubt: must the person who takes out the mortgage compulsorily register the house?

The answer is very simple: Italian law does not provide any prohibition on identifying two different subjects acting, respectively, as borrower e owner of the property. As already mentioned at the beginning, this is also a very common situation in our country: it is often the parents who take out the mortgage on their children’s home, when they are not yet economically independent.

Having made this premise, and possibly after having verified the relevant procedures by consulting a step-by-step guide to the mortgage, you may therefore find yourself in different situations:

• that of a mortgage in the name of a person other than the ownertherefore without any ownership share in the property;
• that of a mortgage registered in the name of a person other than the main owner, who nevertheless holds a ownership share of the property;
• and joint mortgagewhere however only one person physically provides for the payment of the loan.

Of course, the parties can agree on the actual use of the property independently. By way of example, the owner could decide to grant the availability of the property to the mortgage holder, with a loan for use contract.

Mortgage paid by a person other than the owner: what to consider

Having highlighted that there are no particular constraints in making a mortgage payable to a person other than the owner of the property, what aspects should be taken into consideration? For example, how is the request made to the bank and what are the related obligations?

How to apply for a mortgage without owning the property

First of all, how to proceed mortgage application without owning the property? As a rule, the procedure is completely similar to that of a more classic loan, with the possible verification of additional requirements that the bank may need. In particular:

• the borrower, or the person who offers to pay the loan on behalf of third parties, must be in a stable economic situationsuch as to guarantee the repayment of the debt. For this reason, the credit institution will carry out checks on the applicant’s income profile, based on the transparency requirements and guarantee agreements provided for by article 117 of the Consolidated Banking Act;
• in addition to the income checks and the necessary appraisals on the property, the bank may request one additional documentation – for example, a deed of purchase or a promise of sale – which clearly identifies the owner of the property;
• although not strictly necessary, it may be helpful for the borrower and owner to develop a contractalso through private writing, where the relevant roles and payment obligations are reiterated.

If the loan request is approved, the bank will register a mortgage on the property, to guarantee the actual payment of the loan over time.

What does it mean to take out a mortgage on someone else’s property?

But what does it mean to take out a mortgage on a property owned by another person? If not detained no ownership stakeit must be taken into consideration that:

• you will not be able to advance no rights to the propertywhile remaining in obligation with the bank for the repayment of the loan. It will therefore not be possible to decide to sell it, or rent it, unless the owner wants it;
• if a person owns the mortgage but not the house, the tax deductions expected – like the one on interest expense on the mortgageequal to 19% on a maximum sum of 4,000 euros – will not be available. In fact, according to article 15 of the TUIR, the deductions are accessible only to the owner of the property who takes out a mortgage for the purchase of the main residence.

As is evident, the lack of ownership shares exposes one to risks that should not be underestimated, since in the event of financial difficulties – and, therefore, problems in paying the mortgage installments – the borrower will not be able to take action either against the owner or on the property itself. For this reason, it is useful to also examine other options, such as a mortgage with ownership shares or jointly held.

Mortgage with ownership shares or jointly held

As already mentioned, a mortgage without ownership shares can expose you to risks, especially if you are in financial difficulty. For this reason, it is also useful to explore similar possibilities, but with different header configurations.

Mortgage registered with ownership shares

Equally often it happens that the borrower, who is solely responsible for the payment of the loan, agrees with the owner for the transfer of ownership shares. This option allows you to exercise greater control over the mortgaged property in the event of insolvency, however you must always consider that:

• as provided for by article 2809 of the Civil Code, themortgage involves the entire asset. Consequently, in the event of debt default, any actions of the bank such as enforcement will not be limited to the share of the person who signed the mortgage;
• however, in the event of insolvency, the other co-owners could intervene to completely take over the shares or, again, to avoid the forced sale of the property.

What does it mean to be a joint holder of the mortgage

Equally often, it happens that the parties decide to jointly hold the mortgage, although in practice there is only one person who physically provides for the payment of the loan. In this situation, the distribution of burdens and obligations is different.

In case of joint ownership of the mortgageIndeed:

• both joint holders are called to respond jointly to the payment of the financing, regardless of any ownership shares, as provided for by article 1193 of the Civil Code;
• if the person who physically pays the mortgage is in financial difficulty, the bank can take action against bothconsidering how article 2858 of the Civil Code confirms the right of the bank itself to demand payment of the mortgage debt.

A particular case is the one involving i spouseswhere it often happens that both are joint holders of the mortgage, even though only one person physically provides for the payment. It is no coincidence that one of the questions most frequently asked of banks is: “Can I put the house in my wife’s name, but pay the mortgage?” In this similar situation we must also consider that:

• in case of separationthe obligations towards the bank remain the responsibility of both spouses;
• again in the event of separation, the person who paid the mortgage cannot request from the counterparty the proportional repayment of the sums paid because, as provided for by article 143 of the Civil Code and confirmed several times by jurisprudence, the payments of the mortgage installments fall within theobligation to contributeas a duty carried out in the interest of the family and solidarity between spouses.

Finally, it is best not to confuse the joint mortgage with joint house. Indeed:

• the spouses can be co-owners of the property, but the mortgage can be registered in the name of only one person;
• the spouses can be co-owners of the property and the mortgage can be registered in both names;
• the owner of the property can be exclusively a spouse, with the mortgage registered individually or to both.

Accordingly, it is possible to be joint holders of the mortgage but not ownersand vice versa.

How to change the mortgage holder

But what happens if, after having taken out a mortgage without being the owner or having taken out a joint loan, you want to proceed with the ongoing modification? Generally speaking, there are various options available to change the holder of the mortgage. The two main ones are:

• the mortgage replacementwith the closure of the contract already signed with the bank and the opening of a new loan with another credit institution. In this case, the mortgage may be registered in the name of another person;
• l’assumption of the mortgageregulated by article 1273 of the Civil Code, which provides that a new entity takes charge of the financing previously registered in the name of others.

As is easy to imagine, the options available could be even more varied and, for this reason, it is useful to discuss them directly with the credit institution that granted the mortgage.

What are ⁣the legal and‌ financial implications ‍of obtaining a ‌mortgage for a property one does not own?

Sure! Here are ‌some questions you could consider asking in relation to the article:

1. Why ​might someone want to take out a mortgage ‍without ​owning the property they’re financing? Are there any specific ⁣situations where this might be beneficial?

2. What are the potential risks and benefits of jointly holding a mortgage? How does this differ from co-owning a property?

3. In what ways can a mortgage with ownership shares differ from a mortgage‍ held solely by one person? Are⁣ there any specific scenarios where it might be more advantageous to hold a mortgage this way?

4.​ Can you provide ​an example of how a divorce ‍might‌ impact ⁤ownership and⁢ responsibility for a mortgage held by spouses? How is this situation typically handled⁢ by the courts or financial institutions?

5. If someone wants to change the holder ​of their mortgage, what are their options? Are there any reasons why they might choose one option over another?