Italy Mortgages
Buying property in Italy is an exciting prospect. After all, the country has quite a reputation and is known for its art, unique scenery and buildings, great food, natural beauty and more. In fact, when people consider an overseas trip, one of the first countries that come to mind is Italy.
Unfortunately, getting an Italian property can take a while and may prove challenging if you’re not a local. In this article, we’ll be elaborating on why that is, as well as explaining the types of mortgages you can get and what you need to get a mortgage, among other related topics.
Loan Corp can help you understand how the process of getting an Italian mortgage works, as well as offer advice on how much you may be able to borrow.
Use our online mortgage calculator as a guide for your monthly repayments now
We have access to over 200 lenders in the UK to get you the best ratesWe are expert mortgage brokers
The situation in Italy
Italy does allow non-residents to get Italian mortgages. However, the 2008 financial crisis was a turning point in terms of the difficulty of getting a mortgage approved, although some Italian banks have developed processes to simplify the procedure.
Lenders can grant a mortgage loan either in euros or the buyer’s currency at around 50-60% (sometimes 70%) of the Italian property value. This means a non-Italian resident will have to pay a 40-50% deposit – quite a hefty sum.
If in the buyer’s currency, lenders will have to indicate when the exchange range fluctuates more than 20% and then offer you a way to pay the mortgage in a different currency. There also must be a minimum mortgage agreement of €100,000 (or +/- £87,000 at the current exchange rate).
The money laundering problem
Problems with money laundering sparked the New Anti-Money Laundering Regulation, which has complicated and intensified the mortgage policies for both residents and non-residents.
Italian bank directors are now obliged to verify the origin of the money used to buy the property, while properties are not considered sufficient coverage for repeated missed instalments.
The process of getting an Italian mortgage
As mentioned, getting mortgage approval in Italy is a complex process. Once you’ve applied for an Italian mortgage, it can take eight to ten weeks to finalise the deal and receive the loan.
The Italian mortgage application for non-Italian residents involves numerous steps, including:
- An assessment of your financial status.
- A pre-approval mortgage application (approval takes between three days and two weeks).
- A surveyor must inspect the property and issue a compliance report to the Italian bank, which adds another two to three weeks.
- A notary must review the property title and issue a report to the Italian bank again, taking one to two weeks.
- The bank will issue a final mortgage approval if the above is successful, which may take one to two weeks.
The anticipated complications
And there are some complications that buyers encounter. You see, only after these two processes will your funds be released for the mortgage:
- An agreement on a signing date must be made between the borrower and the bank.
- The borrower must have signed the mortgage contract before the same notary.
Here’s the issue. The second step requires physical presence, which may be difficult for some clients overseas. It is, however, possible through power of attorney, but not in every case.
It might even occur that the bank insists you open an Italian bank account to complete the mortgage process. This is so that they can set up automatic mortgage payments for you. However, it’s not a legal requirement, so you may be able to get around this by making payments directly from your original bank overseas in your foreign currency.
We understand that this can all sound quite daunting, but don’t worry. Our team is here to help. Contact us on 0808 301 9509 for a discussion, or fill in this form for a quote.
What documents will I need?
Many Italian banks will require several documents to apply as a non-Italian resident; these include:
- Proof of income.
- Proof of address.
- ID/passport copies.
- Credit history.
- The sale agreement.
Holiday homes in Italy
Building a holiday home in Italy will require a few other documents, including:
- Building permits.
- Tender documents.
- Available funding of up to 50% of the projected property value.
- Proof the mortgage can be paid in a lump sum when the project is complete.
The costs of obtaining an Italian mortgage
Now that we’ve talked about the lengthy mortgage process, we’d like to touch briefly on the final difficulty of obtaining an Italian mortgage. We promise you, however, that there is light at the end of the tunnel.
Getting a mortgage involves considerable costs, such as:
- The fees for the surveyor we mentioned in the process.
- The prices for the notary used in the mortgage process.
- Translation fees.
- Mortgage application fees.
- Insurance fees.
But if you can comfortably cover these costs, you shouldn’t have too many issues.
What are my chances of a successful application?
Given all we’ve said, you might wonder if you’ll even be able to purchase a property in Italy. Well, certain criteria put you in good stead, so if you meet them, you should be able to. These criteria include:
- The financial and employment status of the applicant. Typically, they will request your previous tax declaration. Your monthly payments should never be more than 30% of your income.
- The marital status of the applicant.
- The nationality and domicile of the applicant.
- The amount requested for the loan. Banks typically grant no more than 60-70% LTV (but possibly even 50%).
A mortgage in Italy can last anywhere from five to 25 years (although usually, they’re around 15 years, unlike the usual 25 years). However, if the applicant will be older than 70 by the time the loan is to be paid off or if the applicant is 70 already, banks will generally require the signature of a younger jointly liable applicant.
Additionally, Italian mortgages are most often granted on residential properties, so the likelihood of success increases if that’s what you’re applying for. As always, it’s best to consult a reputable mortgage broker for guidance.
The types of mortgages in Italy
Variable rate mortgages make up many of the mortgages in Italy, as fixed-rate mortgages in Italy are typically between 1-2% higher (this is at the moment and can change). These kinds of loan agreements have interest rates which vary.
On the other hand, fixed-rate mortgage agreements offer a steady rate but at the cost of potential savings. They’re also more secure as the risk of interest rates increasing is negated.
Both of these mortgage offers have zero penalties for early redemption.
Can I get an Italian mortgage on a buy-to-let property?
Unless you’re a local, then this will not be possible. Although, you should discuss this with us as it’s likely that, in certain circumstances, specific licenses or permissions can be arranged.
You can also read our guide on buy-to-let mortgages abroad.
Contact our professionals for assistance
This article, although realistic, may feel like it’s putting barriers in front of your hopes of owning a home in Italy. However, our team at Loan Corp is well-equipped to deal with situations like these. Call 0808 301 9509 or fill out this form to get in touch with an experienced mortgage broker for the best professional advice.
We aim to respond to queries within two hours, from Monday to Friday, and a maximum of four hours over weekends and bank holidays.
FAQs
Can a foreigner get a mortgage in Italy?
Yes, a foreigner can get a mortgage in Italy. However, it’s subject to a very long and intensive process that can take two months to complete. In addition, you must fulfil specific criteria and deposit anywhere between 40-50% of the purchase price.
How does an Italian mortgage work?
Mortgages in Italy are a lot stricter owing to the economic recession and Anti Money Laundering Regulations. That means it’s a lot harder and takes longer than mortgages in many other countries. If you’re successful, it’ll take approximately eight to ten weeks to get a mortgage in Italy.
Do they have mortgages in Italy?
Yes, there are mortgage options in Italy. Although, for a time, it was not easy to get one, and only recently have banks begun making it a bit easier. However, the process is still very intensive and time-consuming.
How long is an Italian mortgage?
Mortgages in Italy are anywhere between 5 to 25 years, although the average mortgage is just 15 years. We know this is unlike many other countries and that it could be costly for some people to pay off as the monthly repayments will be high.
How long can I stay in Italy if I own a house there?
A residency permit will let you stay in Italy for two to five years. And if you’re a non-Italian resident who has lived in Italy for five years, you can apply for a permanent residency.
Contact us now for expert overseas mortgage advice now.