Italy - Mortgage Guide

MORTGAGES IN ITALY : THE TYPICAL PROCESS

MORTGAGE
1. Identify a property
2. Find out how much you are eligible to borrow by completing our quotation request form
3. While in Italy sign a sales agreement (Compromesso) & transfer the deposit to secure the
property
4. Lender issues a draft mortgage offer subject to valuation & Notaio`s report (confirming property is free from debt)
5. Lender instructs valuation
6. Open an Italian bank account and provide details of fiscal number (Codice fiscale) to the lender
7. Arrange monthly mortgage payments
8. Completion
Notaio registers the mortgage deed (this takes between 2-5 days). Once registered, the Notaio releases the mortgage funds to the 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 70-80% of the purchase price, excluding fees. There is usually a minimum loan amount ( 50.000). 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 gross monthly income. A percentage of rental and investment income can also be considered. Mortgage, rent, personal loans and maintenance commitments are considered as outgoings.

TYPES OF MORTGAGE
Mortgages can be obtained for the purchase of new or existing properties. Finance for the purchase of a number of residential properties on a large scale will be considered on a case by case basis. Buy to let mortgages will also be considered on a case by case basis. 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.

MORTGAGE PRODUCTS
A variety of products are available ranging from interest-only to repayment mortgages on a variable or fixed rate basis or a combination of both. Terms can be from 5 to 40 years. However, loans must be repaid by 85 years of age.

Documentation required by the lender
1. Proof of identity & residence
2. Proof of income & outgoings
3. Bank statements
4. Property details

TIME FRAME
An initial approval can be obtained from a lender once all the requested documentation has been
submitted. This takes approximately 2 weeks. A minimum of 6 weeks should be allowed from application to completion.

LIFE ASSURANCE
Life assurance is strongly recommended but not obligatory.

BUILDINGS 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.

BANK ACCOUNT
You will be required to open an Italian bank account before completion.

COMPLETION
Mortgage funds will be released by the lender to your Notaio for completion of the purchase.
COSTS OF SETTING UP AN ITALIAN MORTGAGE Bank's arrangement fee: Typically between 0.4%-0.7% 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 Surveyor
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).