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The luxury real estate market has always aroused strong interest from high-spending buyers looking for prestigious properties and stable investments, but unlike what one might think, even those who buy luxury properties want a mortgage, even if it is partial.
It is an interesting trend that has exploded above all in the last 24 months, confirmed by a survey carried out by Luxforsale.
The survey involved over 250 real estate operators and revealed that over 70% of luxury property buyers (both Italian and foreign) are interested in applying for partial mortgages to finance the purchase of their precious homes.
The prospect of applying for a partial mortgage may seem surprising to those who expect luxury property buyers to be able to buy without accessing finance.
However, this represents a significant shift in the attitude of high-end buyers towards using home credit as a financial instrument.
More Economic Availability for Investments with Greater Profitability
One of the main reasons behind this trend is the search for greater disposable income for more profitable investments. Buyers of luxury properties, often engaged in entrepreneurial or financial activities, are aware of the investment opportunities that can generate significant returns. Keeping some working capital instead of investing it all in the property allows them to make the most of other business opportunities or more profitable investments.
A Guaranteed Safety Cushion
Another important reason behind the choice of partial mortgages is the desire to have a security cushion as guarantee. Despite their considerable financial capacity, luxury buyers may prefer not to freeze their funds completely in the purchase of the property, maintaining sufficient liquidity to deal with any emergencies or unforeseen situations, fear this increased exponentially during the pandemic period.
Partial mortgages offer a prudent strategy for balancing the desire to own prime properties with the need to maintain one's financial security.
Tax and Financial Advantages
Choosing a partial mortgage can also be motivated by tax and financial advantages. Depending on the buyer's tax jurisdiction and applicable regulations, mortgages can provide benefits such as interest deductibility or favorable tax treatments, which could make the option of part financing even more attractive to luxury real estate buyers.
Impact on the Luxury Real Estate Market
The growing trend towards partial mortgages can have a significant impact on the luxury real estate market.
On the one hand, real estate agents and brokers will need to adapt to provide customized financing solutions and advisory services to help buyers understand the intricacies of partial financing, especially for those who will be able to specialize in mortgages for overseas buyers.
On the other hand, this trend could make the luxury real estate market even more accessible to a wider range of buyers, increasing the demand for high-end properties.
