Italy A basic guide to Italian mortgages

Eligibility & criteria
Italian farmhouse All mortgages are in Euros and will be secured against Italian residential property. Italian mortgages are full status and therefore proof of income and outgoings will be required to submit an application to a lender.

The maximum loan to value available is 80% of the purchase price.
Italian lenders assess eligibility on the applicant's capacity to repay the mortgage. As a guideline, your existing monthly outgoings as well as the monthly repayment on your new Italian mortgage should not exceed 35% of your gross monthly income. A percentage of any rental and investment income you receive can also be considered. Mortgage, rent, personal loans and maintenance commitments are all considered as outgoings. To find out how much you can borrow complete our quotation request form.

Types of mortgage
Mortgages can be obtained for the purchase of new or existing properties. The property must be registered at the land registry as a habitable civil dwelling. Please note that the criteria for ‘habitable’is set by the local authorities and unless the property has been granted this certificate, mortgage finance cannot be obtained.

Renovation and construction loans are available, however estimates will be required at the time of application, and clients must have obtained all the necessary authorisations. Once the mortgage has been approved, funds will be released by the lender directly to your builders following submission of invoices. The property must be classified as ‘habitable’ before a lender will consider an application for a renovation loan. In the case of construction loans, more detailed information on the project will be required, so please speak to one of our Italian Consultants.

Mortgage products
A variety of products are available. Both interest-only and repayment mortgages can be arranged, on a variable or fixed-rate basis, or a combination of both. Terms can be from 5 to 40 years, however loans must be repaid by the age of 85. Many of our products do not have any early redemption penalties. For an idea of the rates available see our Best Buy Tables, or for a personalised quotation complete our quotation request form.

Documentation required by the lender
Lenders are required to have sufficient documentation proving that the borrower can afford the mortgage repayments and you will therefore be required to submit a number of supporting documents. Please see below for a summary of what will be required. A detailed list will be compiled based on your situation and sent to you with your personalised quotation.
You will need:

Proof of identity & residence
Proof of income & outgoings
Bank statements
Property details

Timeframe
An Agreement in Principle can be obtained from a lender once all of the necessary documentation has been submitted. This takes approximately five working days. However, for loan amounts in excess of €750,000 this may take longer.

We would recommend that you allow a minimum of eight weeks from application to the lender to completion.

Life assurance
Life assurance is not mandatory in Italy. However if you would like to receive a quotation for life cover please ask your Consultant to recommend a provider.

Buildings insurance
The lender will insist you take cover with their chosen provider. However, this only meets their basic requirements. For more comprehensive cover, further insurance will need to be taken out.

Bank account
You will need to open an Italian bank account before completion, from which your mortgage repayments will be debited.

Payment of your Italian mortgage
Please be aware that missing a mortgage payment in Italy may have serious consequences and we therefore strongly advise you arrange for monthly debits from a UK account. A number of foreign exchange providers offer a renewable 12 month regular payment plan. The exchange rate is fixed at the start of the plan, and the agreed amount will be debited from your UK account and sent to your Italian account each month. This service gives you peace of mind in the knowledge that your Italian mortgage repayments will be met automatically each month. Please ask one of our Consultants to recommend a provider if this is of interest.

Transferring funds to Italy
Whilst purchasing your Italian property it is also likely that you will need to transfer funds to Italy, to pay a reservation fee, a deposit on the property, or to cover additional purchase costs.
Making payments in a foreign currency will mean you are exposed to movements in exchange rates. This is likely to affect the final cost of the property you are buying, as will the exchange rate you receive when you make the transfer.
Through our carefully selected foreign exchange provider we are able to not only save money on the exchange rate you receive but reduce your exposure to exchange rate movement.

For further information on how these services can benefit you please talk to your consultant who will be able to answer any questions you may have.

Completion
At completion a representative from the bank will be present. You do not have to be present at completion and can give Power of Attorney if necessary. Your lawyer will be able to discuss this with you in more detail. The Notaio will register the mortgage deed after completion. This will normally take between 2-5 days. Once the deed has been registered the Notaio will release the mortgage funds to the beneficiary.

Costs of setting up an Italian mortgage
Bank’s arrangement fee: Typically between 0.4%-0.7% of the loan amount (deducted from the loan amount)

Bank’s completion costs: Typically between €100-€160 (deducted from the loan amount)

Valuation fee – approx €200-€250, payable directly to the surveyor

Please note that some lenders may charge an annual management fee

Notary fees – your Notaio can provide you with a breakdown of the fees payable on request.

If you take out an Italian mortgage, a further cost will be charged by the Notaio for registering the mortgage deed at the land registry (approximately 1%-1.5% of the loan amount).

Mortgage registration tax – (deducted from the loan)

If main residence (resident) – 0.25% of the loan
If second property (non-resident) – 2% of the loan

Buildings insurance – a one-off fee is payable to provide basic cover for the duration of the mortgage (deducted from the loan).

We charge a non-refundable application fee of £200. A further fee may be payable on completion of the mortgage. Please refer to your personalised quotation for confirmation.

We recommend that you seek professional, legal & tax advice before purchasing in Italy.