Abstract

«French-style» amortization is a well-known and widespread method of amortization of a mortgage. Nonetheless, over the latest fifteen years, it has been repeatedly challenged in the Courts – recently a preliminary question was referred to the Supreme Court pursuant to Article 363-bis of the Italian Civil procedure code – for using the compound regime for the calculation of the constant instalment: the key factor around which the various controversial legal issues debated in jurisprudence revolve. The article highlights that compound capitalization is the standard law of financial mathematics and a regulatory standard implemented in various Italian and European statutes and that the financial burden of a loan ultimately depends on the elements of the contract (principal, interest rate, frequency and amount of the periodic instalment) and not on the financial regime used for the calculation of the constant instalment and discusses on this basis the main legal issues.