In this summary, we will highlight some crucial information you should be aware of, which will enable you to begin the process of acquiring a mortgage in Italy as a foreigner.
There are a lot of variables that can make it challenging to get a loan to buy a home, especially if you are seeking to buy a house. Moreover, being a non-Italian resident does not speed up the already drawn-out procedure since Italian banks have always maintained a reputation for being stringent loan providers.
Different kinds of mortgages and getting your head around the numbers
Mortgages in Italy can be obtained with either a variable or a fixed interest rate. On the other hand, the vast majority of mortgages that are active in Italy (more than two-thirds of the market) have an adjustable interest rate. This is because the fixed rates are one to two percentage points higher than the initial variable rate.
The submission of a purchase application for property in Italy must be made so through an Italian financial institution.
Since there are not many banks that provide foreign mortgages, it is important to conduct some research as well as acquire the appropriate professional guidance to ensure that you obtain mortgage terms and interest rates that are suitable for your situation.
Mortgages are currently being made available by Italian banks to individuals who are not citizens of the country. The loan-to-value ratio (LTV) for these mortgages is between 50 and 60 percent, and the minimum mortgage agreement required is typically €100,000. Non-resident borrowers in Italy are often required to put down between 40 and 50 percent of the loan amount.
Because Buy-to-Let mortgages are not offered in Italy, people interested in purchasing homes with the intention of later renting them out should consult an Italian solicitor before making any purchases. This indicates that even while your bank lender does not place any limits on renting out the property, you may still be required to obtain certain approvals or licenses from the local government to do so.
If you are unclear about anything during the mortgage process, it is always advisable to speak to a specialist, and this is especially important if you are located overseas. We are able to put you in touch with an international mortgage broker who has connections with a number of Italian banks, which will enable you to locate the bargain as well as the information that you require.
How to get a mortgage in Italy as a foreigner
Foreigners have always had an easier time getting mortgages in Italy than in most other countries.
As a foreigner seeking a mortgage in Italy, you will need to show that you can handle the financial responsibility of the loan as well as other conditions outlined by the lending institution and the Italian government such as;
- Possessing a regular source of income,
- A high credit rating,
- Money for a down payment
In addition to these forms of identification and confirmation of residency in Italy, they will also want proof of your financial standing. Talking to a local mortgage broker or real estate agent who is familiar with the area can be a big help in helping you to get a houses a foreigner in Italy.
However before agreeing to a mortgage loan, it is wise to shop around and thoroughly investigate the terms and rates being offered before jumping into any mortgage agreement.
What you need to provide to get an Italian mortgage?
In addition to the actual application form, Italian lenders require many different forms of identifying documentation. Documents such as the following will be requested from those living abroad:
- Identification cards or copies of your current passports are required.
The original purchase and sale agreement
Proof of income (including your most recent three pay stubs, your most recent two-thirds of your tax certificates, and a copy of your job contract).
Report about one’s credit
Documentation to verify your residence (copy of recent utility bill)
Since this is not a quick procedure and it may take a significant amount of time to verify all of the aforementioned papers, it is in everyone’s best interest to collect these kinds of identification as soon as possible during the transaction process.
How are my taxes calculated on my Italian purchase?
The cadastral value is an evaluated figure that is used to compute the majority of the property’s tax obligations. It is recorded on the property’s deed. Each property receives an assessment, which paves the way for an official Cadastral Value to be assigned to it. This evaluation takes into account the property’s location as well as its quality and size.
The Cadastral Value will be used to calculate additional fees and taxes such as property and government tax.
Please consider that the Cadastral Value assigned to the property by the Italian Inland Revenue is sometimes lower than the property’s market value.