Italian Mortgages

Step by Step Guide to apply for an Italian Mortgage:

1) Calculate your budget – contact our Italian Consultant at Baydonhill International Mortgages (BIM) and obtain a free decision in principle from our Italian lenders.

2) Decide on a property. Sign the sales agreement (compromesso) and transfer the initial deposit with Baydonhill FX to secure the property.

3) Open an Italian bank account while in Italy and obtain a codice fiscale

4) Submit full mortgage application to BIM with all required supporting documentation in order to obtain financial approval

5) Obtain full mortgage approval after property valuation has been conducted on property and your appointed Notaio has compiled a notary report confirming that there are no existing charges on the property.

6) Set up an International Regular Payment plan with Baydonhill FX to send an agreed amount of Euros every month to your Italian bank account, covering monthly mortgage repayments, utility bills etc.

7) Attend il rogito to sign the mortgage deeds, or else arrange for a Power of Attorney to do this on your behalf

8) Notaio registers the mortgage deed (this takes between 5 – 10 days) and releases the mortgage funds to the assigned beneficiary.

Eligibility & criteria

All mortgages are in Euros and will be secured on your Italian property. Mortgages are full status and proof of income and outgoings will be required.

The maximum loan to value available is between about 75% of the purchase price, excluding fees. The minimum loan amount when obtaining a mortgage through BIM is €100,000.

Italian lenders assess eligibility on the applicant's capacity to repay the loan. As a guideline, your existing monthly outgoings and the repayment on your Italian mortgage should not exceed 35% of your net monthly income. A percentage of rental and investment income may also be considered by certain lenders, although proof of this future income, as in the provision of a fixed term tenancy agreement, will need to be shown. Mortgage, rent, personal loans and maintenance commitments are considered as outgoings. Speak to our Italian consultant to find out the maximum that you are able to borrow.

Types of Italian Mortgages

Mortgages can be obtained for the purchase of new or existing properties.

TOP TIP: The property must be registered at the land registry as a habitable dwelling. Please note that the local authorities set the criteria of 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 and clients must have obtained all the necessary authorisations. In the case of construction loans, more detailed information will be required. Funds will be released by the lender following the submission of invoices. The property must be classified as habitable before a lender will consider an application for a renovation loan.

Capital Raising on properties already owned in not currently available in Italy, however if you are planning to raise funds on a property that you have paid for in cash within the last 12 months, you may still qualify for a deferred-purchase mortgage. You may also be able to submit a renovation post-works mortgage for any work already taken out on your property.

The refinance of your existing Italian mortgage in order to take advantage of a more competitive interest rate is possible. However, refinancing will incur both costs at the Notary office and with the new lender. Please note that Italian lenders may require that you take a further 5% liquidity on top of the amount to be refinanced, as an additional “cash out”.

Italian Mortgage Products

A variety of products are available ranging from interest-only to capital repayment mortgages on a variable or fixed rate basis or a combination of both. Terms can be from 5 to 30 years. However, loans must be repaid by 75 years of age. Most mortgage rates are indexed against on the Euribor base rate. For an initial idea of rates and monthly repayments, use our quick quote online mortgage calculator, or else complete a personalized quotation request form and we will send you a tailored quotation.

Documentation required

Italian lenders are legally required to request full documentation proving that the borrower can afford the mortgage repayments, and therefore you will be required to submit a significant 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.

* Proof of identity & residence

* Proof of income & outgoings

* Bank statements

* Property documents

Timeframe

An initial approval can be obtained from a lender once all the requested documentation has been submitted. This takes approximately 10 working days.

A minimum of 8 weeks should be allowed from application to completion.

Life Assurance

Life Assurance is strongly recommended, but not obligatory

Buildings and Contents 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.

Italian Bank account

You will be required to open an Italian bank account before completion. Italian bank accounts must be opened in person at the branch of your choice. Italian mortgage lenders do not assist their clients with retail banking services and they do not mind if the Italian mortgage repayments will be debited from a competitor bank account.

Monthly Mortgage Repayments

Please be aware that missing a monthly mortgage payment may have serious consequences and we therefore strongly advise participation in our international regular payment plan. This service gives you peace of mind in the knowledge that your Italian mortgage repayments will be met automatically each month.

Completion

Mortgage funds will be released by the lender to your Notaio for completion of the purchase.

Typical Set up costs for Italian Mortgages

Bank’s arrangement fee: Typically around 1% of the loan amount (deducted from the loan)

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

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

Please note: some lenders may charge an annual management fee

Notary fees – your Notaio can provide you with a breakdown of the fees payable if requested. 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).

BIM charges a non-refundable application fee of £250 and additional completion fees may be payable with selected products. All fees will be disclosed within initial mortgage quotation.

We recommend that professional legal & tax advice should be sought to protect your own interests.

Italian Mortgages

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