TAN vs TAEG: Decoding Italian Mortgage Rates

Note: This content is specific to the Italian financial market.

When comparing mortgages in Italy ("Mutuo"), you will be bombarded with two acronyms: TAN and TAEG. Confusing them can cost you thousands of euros.

TAN (Tasso Annuo Nominale)

This is the Nominal Annual Rate.

• It is the raw interest rate used to calculate your monthly interest payment.
• It does NOT include expenses.
• It is the number banks put in big bold letters in advertisements (e.g., "Fixed Rate 2.50%!").

TAEG (Tasso Annuo Effettivo Globale)

This is the Annual Percentage Rate of Charge (APR).

• It represents the true cost of the loan.
• It INCLUDES: The TAN + administration fees (istruttoria) + appraisal fees (perizia) + mandatory insurance policies.

The Insurance Trap

In Italy, banks often offer a "discounted" TAN if you buy their expensive life or payment protection insurance ("Polizze CPI").

• Bank A: TAN 2.5%, but requires a €10,000 upfront insurance policy. -> TAEG 3.5%.
• Bank B: TAN 2.8%, no insurance required. -> TAEG 2.9%.

Bank B is actually cheaper, even though the TAN is higher. Always compare the TAEG.

Conclusion

Ignore the marketing. When comparing two Italian mortgage offers (preventivo), look only at the TAEG. It is the only number that tells the truth about how much money will leave your pocket.

👉 Italian Mortgage Calculator: Compare TAEG