To secure that idyllic Italian home it may be necessary for you to raise finance in the form of a mortgage to pay for it.
Your Italian estate agent should be willing to assist you, alternatively local banks, brokers and high street lenders in Italy will be able to help. There are also a number of international mortgage brokers around who specialise in securing finance for overseas properties and there is one international lender with significant presence in Italy who can lend as well, meaning that you can be assured of securing the best deal.
The translation of ‘mortgage’ into Italian is mutuo ipotecario, and just like most things in Italy securing your mortgage locally can take quite some time and a significant amount of form filling! If you are prepared for this and make sure any contract to purchase that you sign is conditional to you securing your finance you shouldn’t have too much to worry about! Alternatively the well known British bank Barclays has local offices in Italy (it’s the only British bank offering this service) and they annually finance hundreds of purchases and even offer re-mortgaging. You can contact Barclays by clicking here, filling in their contact form and they’ll call you back to discuss your requirements (couldn’t get much easier than that!)
Generally speaking your mortgage repayment should exceed no more than 30-40% of your net monthly income and affordability checks are quite strictly enforced to ensure that borrowers do not run the risk of losing their home should circumstances or interest rates change. This level of protection is for the borrower’s benefit, but to British borrowers for example it can feel a little restrictive.
Non status or self certification mortgages don’t exist in Italy, all applications have to be supported by solid proof of income. Usually you can borrow up to 85% of the value of your primary property and up to 50% for a second home purchase. The 85% for a first property can be extended to 95% if the house needs significant renovation for example.
A property in Italy can be bought in single or joint names and a mortgage can be based on single or joint incomes. If you are employed you will need to provide your last 3 months pay slips, an employer’s reference/p60 form or your country’s equivalent and your previous 6 months personal bank statements. If you’re self employed expect to have to present copies of audited accounts for the last three years, 12 months business bank statements and 6 months personal bank statements. Most lenders are not prepared to take into account expected rental income from the property when calculating how much you can borrow.
As mentioned, the process to secure a mortgage in Italy from a local lender can take a considerable amount of time 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 and in the unlikely event that you fail to secure finance it will be returned to you. Some lenders allow you to arrange a mortgage in advance, and the terms of the loan offer are guaranteed for up to 3 or 4 months. Therefore if you have a property in mind you can go ahead and try and secure your mortgage even before you’ve signed contracts to purchase.
When it comes to types of mortgages available and fees etc., most mortgages are repayment where the borrower pays a combination of capital and interest back each month. Fees are usually detailed up front and include a 1% arrangement fee, a 1% administration fee and a 2% registrations tax. Some lenders also charge a one off set sum of around EUR100 for assisting you as well.
International mortgage brokers offer to do all the leg work for you and if you’re not resident in Italy but purchasing property there, these brokers can often prove invaluable. They will research the market to get you the best deals and complete forms and submit all paper work on your behalf. Using a middle man who has such a depth of experience in arranging foreign mortgages can take such a huge strain off the whole buying process.
If you would like to find out more about arranging mortgages to buy property in Italy why not contact Barclays initially as they will respond in English and at your convenience and they’ll give you an idea of what you can borrow as well.
