Mortgages In Italy

Italian mortgages are widely available and you may find it beneficial to apply for lending facilities in Italy. Below is a general account of what to expect when applying for a mortgage.

Mortgages for property in Italy are normally available for up to 80% of the purchase price. This means you’ll need to find a 20% deposit. The loan is based on the bank’s valuation of the property (cost around 300 euros) and should the valuation be higher than the asking price, a slight increase in 80% lending can be achieved.

The process of securing a mortgage (mutuo ipotecario) in Italy is not unlike most things in Italy: it can take quite some time and a significant amount of form filling. Therefore it is wise to begin proceedings as soon as you have signed the preliminary contract to purchase. At this stage you are required to make a deposit but this is protected by law in the unlikely event that you fail to secure finance the deposit will be returned to you in full. Some lenders will allow you to arrange a mortgage in advance, with the terms of the loan offer being guaranteed for up to 3 or 4 months. If you have a property in mind you can then go ahead and try to secure your mortgage even before you have signed contracts to purchase.

Most mortgages in Italy are repayment mortgages where the borrower pays a combination of capital and interest back each month. Fees are usually clear and up-front and they will include a 1% arrangement fee, a 1% administration fee and a 2% registrations tax. Some lenders also charge an additional one-off set sum of around 100 euros.

Proof of income is always required by lenders and self certification mortgages in Italy are not normally available. Lenders will not normally take into account rental income when calculating your level of borrowing. Loans are typically based on 30% of your monthly (joint) income.

To help you prepare for the mortgage application, the following checklist of paperwork will need to be submitted with your application:

All Applicants Details:

Photocopy of your passport(s)
Photocopy of birth & marriage certificate(s)
Proof of residence in the UK. ie. driving license or Council Tax forms
Six months' personal bank statements illustrating income & outgoings.

Outgoings & Liabilities:

Most recent annual mortgage statement and written proof of the current monthly repayments

Copy of tenancy agreement if renting
Copy of any loan agreement(s) in place
Copy of most recent credit card statement
Copy of Decree Nisi or any such documents confirming maintenance commitment

The Property:

Copy of the Sales Agreement
Photographs of the property if available
Estimates if applying for renovation work - please note these must be from native builders and be in the native language
Architect's plans for construction

For Employed Applicants:

Confirmation of employment, ie. contract or reference from your employer(s) stating your income, position and start date of employment
Three most recent pay slips and last 2 P60s

For Self-Employed Applicants:

Last three years' audited accounts
A letter from a chartered accountant confirming the figures and personal drawings
Last two years' tax returns

Other Sources of income:

Last two years' tax returns
Copy of tenancy agreement if rental revenue is to be included
Annual statement of pension or retirement payment details
Additional Requirements:
Proof of availability of deposit funds

Types of Mortgage & General Requirements

Mortgages can be obtained in Italy for the purchase of brand new or existing properties, also for properties on leaseback schemes. Finance for the purchase of many residential properties on a large scale is considered on a case by case basis.

A variety of products are available, ranging from interest-only to repayment mortgages on a variable or fixed rate basis, or even a combination of both. Terms can be from 5 to 30 years, however loans must be repaid by 75 years of age. When shopping around for your mortgage, be aware that sometimes banks in Italy will require repayment of your mortgage within10 or 15 years and the age stipulations can vary from 65 to 75 years of age.

It is important that the property is registered at the Land Registry as a habitable dwelling. Italian local authorities set strict criteria as to what is considered ‘habitable’ and unless the property has been granted with this certificate, mortgage finance cannot be obtained.

For renovation and construction loans, estimates must be provided at the time of application for your mortgage, along with proof of all the necessary authorisations. In the case of construction loans, more detailed information will be required. Funds are released by the lender following the submission of invoices. Again, the renovation property must be classified as “habitable” at the Land Registry before a lender will consider an application for a renovation loan.

Please click for further information regarding mortgages for Off-plan property in Italy.

Please click the link if you would like to find out more about Italian Investment Property.