With huge variety in landscape and culture from the snowy Alps in the North, the historic cities of Florence and Venice further South and the fine Mediterranean climate in the Mezzogiorno, Italy has arguably something for everyone. Throw in the relaxed and indulgent Italian lifestyle and it's not hard to see why so many UK nationals look to buy a holiday property here. So, if your thinking is similar, this guide should help you get the facts on buying a property in Italy and getting an Italian mortgage:
Italian mortgages: what you need to know
- The maximum amount you can borrow with an Italian mortgage is 60% LTV
- Only repayment mortgages are available and the minimum amounts available
start at €100,000.
- Rates depend on your circumstances and requirements - between
- You must pass the affordability criteria of Italian banks – your total amount of repayments cannot exceed 30% of your net monthly income
How much can I borrow?
The maximum amount you can borrow with an Italian mortgage is 60% of the value of the property. Only Repayment mortgages are available and the minimum amounts available start at €100,000.
What are the Interest Rates?
Italy is in the Eurozone where rates are a little higher than in the UK but, like in the UK, there are a wide variety of mortgage products available so a rate depends on your circumstances and requirements. Expect a range between approx 3.5-4.75%
Are there any income requirements?
To get a mortgage in Italy you must pass the Affordability criteria of Italian banks. This means that the total amount of repayments you have to make in any month - including the repayments you would have to make on the Italian mortgage you wish to apply for - cannot exceed 30% of your net monthly income.
What else do I need to know about Italian mortgages?
The maximum mortgage term available is 30 years and the maximum age for getting a mortgage in Italy is 75 years. There are also some parts of Italy, like Calabria in the South (the 'toe' of Italy, where you simply cannot get a mortgage. Call us to check other regions.
How do negotiations work?
The one piece of advice we offer here is that you work with an Estate Agent licensed by the Chamber of Commerce; this will provide extra security. They will provide you with many properties to choose from in your desired area. We can put you in touch with some.
What is the Legal process like?
The real estate buying and selling process in Italy is fairly streamlined and thankfully not very complex.
The first step you take after seeing a property you like and want to buy is signing a "Proposta irrevocabile d'acquisto" – an irrevocable Purchase Agreement. With this you'll be asked to pay approx. 10% of the purchase price. This is then either returned to you when you sign the Compromesso (see next stage) or if the sale does not proceed through no fault of your own or used at that stage as part of the purchase price or it is forfeit if you subsequently pull out of the purchase. In the interim it is held by your Agent.
At this point you can also instruct a survey on the property and conduct your searches, if you haven't already done so.
The next step is the Compromesso which details the terms of the sale and is legally binding. You must also put forward one-third of the purchase price (you can use the 10% from the Proposta irrevocabile d'acquisito) and this will be forfeited if you pull out after this stage. Your security in the deal though is that if the Seller pulls out they must pay you twice this amount in compensation.
The final part of the process takes place 1-3 months later and is called "Rogito". This is the final sale document drawn up by a Notary and signed by both parties to complete the sale with, of course, the balance of the purchase price
Purchase tax is 4% but for Foreigners who either already own property in the country or don't wish to adopt residency in the country this is 11%. However, the tax is calculated based on the Declared Value of the property, not the purchase price, and this is usually much lower than the purchase price.
We hope this makes the process clearer and if we can help you with your Italian mortgage, fill in the form opposite and get in touch.
Lastly, to get the best rates on your foreign exchange transactions we strongly recommend you open an account with HiFX. Quite simply, they will provide a far better exchange rate than your bank and they can do one off transactions or allow you to lock in a guaranteed FX rate on mortgage payments for up to one year in advance. To find out more and sign up, visit their website here http://www.hifxonline.co.uk
Overseas Mortgages are not regulated by the Financial Conduct Authority, nor are they protected by the Financial Ombudsman Service or Financial Services Compensation Scheme. They may not be covered by the home regulator of the country concerned either, so you should consider the risks carefully.
Are you looking for Overseas Mortgages?
Just complete a few simple questions below and we'll be in touch soon to get things moving.
( * Indicates required field)
"A very helpful and efficient service"
S Price, Australia
What is needed to apply
Applying for a Overseas Mortgage is very easy. Below are listed the things you need in order to apply.
- Eligibility Criteria Clean credit and sufficient income to make repayments is required.
- Documents Required Initially just an application form but in time you will be asked to prove income and ID
- Additional Comments The entire process takes 6-8 weeks depending on the country you are buying in
FAQs for Overseas Mortgages
- What countries can I get a mortgage in?
Almost any. Though the popular destinations for UK residents buying overseas tend to be France, Spain, Italy, Portugal and the USA, mortgages can also be achieved in Turkey, Australia, New Zealand, South Africa, Singapore, Hong Kong and many more.
- How much can I borrow?
This depends on your circumstances but one key factor we look at is your Debt to Income ratio. Ideally the sum total of the repayments you make on all your debts per month plus the proposed payments for the overseas mortgage you want should not exceed 35-40% of your net income. This factor tends to be the biggest constraint on borrowers raising an overseas mortgage.
- How will I manage the language and cultural issues?
We will ensure you have access to English-speaking experts in the country you are intending to buy in.
- Will my UK credit record affect the success of my application?
Yes, it is a key factor in the eligibility criteria.
- How much will it cost to arrange my mortgage?
The fee to help prepare your mortgage varies from country to country but will be made clear to you in advance.
To learn more or to apply for a Overseas Mortgages please either ﬁll in the call back form at the top of this page or call us on 01494 410 125 and we'll walk you through your options at no cost or obligation.