Buying Guide – Italy

Lending criteria

Mortgages are available in Euro and will be secured against Italian residential property. Italian mortgages will require full disclosure of income, outgoings and savings.

The maximum loan to value available is 70% of the purchase price, or valuation, whichever is the lower.

Italian lenders assess eligibility on the applicant's capacity to repay the mortgage, as well as recent credit history. As a guideline, your debt to income ratio should not exceed 35% of your gross monthly income; however there may be a degree of flexibility in this for certain types of applicant. Mortgage, rent, personal loans and maintenance commitments are all considered as outgoings. To find out how much you can borrow and for a formal decision in principle, click on Apply Now.

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’ are 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 contact us.

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 20 years; however loans must be repaid by the age of 70; however in some circumstances this may be increased. Many of our products do not have any early redemption penalties. For an idea of the rates available please contact us, or for a personalised quotation by clicking on Apply Now.

Documentation you will be required to provide

Proof of identity (passports, driving licence, or other suitable photo ID.)
Proof of residence (utility bill, bank statement etc. dated within the last 3 months)
Proof of income (latest payslip, tax return, copy of accounts etc.)
Proof of existing mortgage or rent payments (usually covering the last 12 months)
Proof of deposit (last 60 days bank statements showing source of funds)
Bank statements (usually last 60 days to show salary credits and outgoings)
Property details (copy of sales particulars, or sales contract)
For completion you’ll need to have your codice fiscale (tax code); ask your solicitor or the real estate agent to arrange this for you.

Documents will need to be either original or certified copies. Items such as passports and driving licences will need to be in date at the time the mortgage is due to complete or close.

Timeframe

We will issue a decision in principle within 48 hours of receiving a fully completed application.

The processing time from the application being received by the lender to completion or closing is approximately 6 weeks.

Life assurance

Life assurance is not compulsory in Italy. However if you would like to receive a quotation for life cover please contact us and we will organise an illustration for you.

Buildings insurance

This is a legal requirement of Italian mortgages and the lender must appear as the beneficiary of the house insurance. The amount of insurance required will be established by the valuation, and the insurance value will not be the same as the value of the property. The insurance value is the amount required to rebuild the property, clearly that will not include the value of the land as that would still exist. Costs will vary depending upon the amount of cover.

Bank account

You will need to open an Italian bank account before completion, from which your mortgage repayments will be debited. This can also be used for utility bills, taxes etc. We can assist you in opening an account.

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 your local bank 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 local account and sent to your Italian account each month. This service gives you peace of mind in the knowledge that your mortgage repayments will be met automatically each month. Please contact us 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 contact us and we 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 1% of the loan amount

Valuation fee – will vary depending upon the purchase price

Legal fees – typically 1% of the purchase price

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

Taxes - real estate tax (imposta ipotecaria e catastale) of 3 per cent, stamp duty of 7 per cent, a local tax (valore catastale) of between 0.4 and 0.8 per cent,

Estate agents’ fees - both seller and buyer pay the estate agent, usually 3 per cent apiece. You’ll also have to settle with the geometra (architect/surveyor), and pay your fees for connecting to the water, electricity and gas mains.

Mortgage registration tax – (deducted from the loan)

Buildings insurance – will vary depending upon the amount of cover.

We charge a non-refundable application fee of £150.00. 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.

Your home is at risk if you do not keep up repayments on a mortgage or other loan secured on it. Be sure that you can afford the repayments before entering into any credit agreement. Any quotation supplied is not an offer of mortgage and may be subject to a change without notice. Exchange rate movements may increase the Sterling or home currency equivalent of your liability under a foreign currency mortgage.