A basic guide to Italian mortgages




Eligibility & criteria
All mortgages are in Euros and will be secured against Italian residential property. Italian mortgages are full status and therefore proof of income and outgoings will be required to submit an application to a lender.
The maximum loan to value available is 80% of the purchase price.
Italian lenders assess eligibility on the applicant's capacity to repay the mortgage. As a guideline, your existing monthly outgoings as well as the monthly repayment on your new Italian mortgage should not exceed 35% of your gross monthly income. A percentage of any rental and investment income you receive can also be considered. Mortgage, rent, personal loans and maintenance commitments are all considered as outgoings.

Types of mortgage
Mortgages can be obtained for the purchase of new or existing properties. The property must be registered at the land registry as a habitable civil dwelling. Please note that the criteria for ‘habitable’is set by the local authorities and unless the property has been granted this certificate, mortgage finance cannot be obtained.
Renovation and construction loans are available, however estimates will be required at the time of application, and clients must have obtained all the necessary authorisations. Once the mortgage has been approved, funds will be released by the lender directly to your builders following submission of invoices. The property must be classified as ‘habitable’ before a lender will consider an application for a renovation loan. In the case of construction loans, more detailed information on the project will be required, so please speak to one of our Italian Consultants.

Mortgage products
A variety of products are available. Both interest-only and repayment mortgages can be arranged, 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 the age of 85. Many of our products do not have any early redemption penalties.
Documentation required by the lender
Lenders are required to have sufficient documentation proving that the borrower can afford the mortgage repayments and you will therefore be required to submit a number of supporting documents. Please see below for a summary of what will be required.
You will need:

  • Proof of identity & residence
  • Proof of income & outgoings
  • Bank statements
  • Property details

Timeframe
An Agreement in Principle can be obtained from a lender once all of the necessary documentation has been submitted. This takes approximately five working days. However, for loan amounts in excess of €750,000 this may take longer.
We would recommend that you allow a minimum of eight weeks from application to the lender to completion.

Life assurance
Life assurance is not mandatory in Italy. However if you would like to receive a quotation for life cover please ask one of our Italian Consultants.

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 need to open an Italian bank account before completion, from which your mortgage repayments will be debited.

Payment of your Italian mortgage
Please be aware that missing a mortgage payment in Italy may have serious consequences and we therefore strongly advise you arrange for monthly debits from a UK account. A number of foreign exchange providers offer a renewable 12 month regular payment plan. The exchange rate is fixed at the start of the plan, and the agreed amount will be debited from your UK account and sent to your Italian account each month. This service gives you peace of mind in the knowledge that your Italian mortgage repayments will be met automatically each month. Please ask one of our Consultants to recommend a provider if this is of interest.

Transferring funds to Italy
Whilst purchasing your Italian property it is also likely that you will need to transfer funds to Italy, to pay a reservation fee, a deposit on the property, or to cover additional purchase costs.
Making payments in a foreign currency will mean you are exposed to movements in exchange rates. This is likely to affect the final cost of the property you are buying, as will the exchange rate you receive when you make the transfer.
Through our carefully selected foreign exchange provider we are able to not only save money on the exchange rate you receive but reduce your exposure to exchange rate movement.
For further information on how these services can benefit you please talk to one of our Italian Consultants

Completion
At completion a representative from the bank will be present. You do not have to be present at completion and can give Power of Attorney if necessary. Your lawyer will be able to discuss this with you in more detail. The Notaio will register the mortgage deed after completion. This will normally take between 2-5 days. Once the deed has been registered the Notaio will release the mortgage funds to the beneficiary.

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 amount)
Bank’s completion costs: Typically between €100-€160 (deducted from the loan amount)
Valuation fee – approx €300-€350, payable directly to the surveyor
Please note that some lenders may charge an annual management fee
Notary fees – your Notaio can provide you with a breakdown of the fees payable on request.
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).


How to buy a home in Italy


The buying procedure stage by stage
Buying a home in Italy is a straight forward process controlled by Legislation that protects both the buyer and seller
There are three stages in the process:
  • Making an acceptable offer.
  • A formal legally binding agreement, known as the Compromesso.
  • The final legal transfer called the Rogito or Atto Notarile.

Preliminary Contract (Compromesso)
This is a legally binding contract between both parties and involves the buyer making a deposit payment between 10-30% of the agreed price to the seller. Once signed both parties are legally bound to complete the contract.
The Compromesso details the following:
  • Details of the Buyer and Seller.
  • Price and details of the property.
  • Method of payment.
  • Date of the final contract.
  • Any special clauses specified by both parties.

The Compromesso should be made using professional assistance to ensure the following has been researched:
  • A title search is undertaken.
  • No outstanding loans or mortgages etc are on the property.
  • All right of way issues are settled.
  • Any rights of local farmers that have first option of buying the land with the property are made clear.
  • All permissions and permits to build are in order.

Final Deed (Rogito or Atto notarile)
The Atto notarile meeting occurs on an agreed date after the signing of the Compromesso. At this meeting the property ownership is formally transferred from one party to the other. The balance of the purchase price is paid at this meeting in the presence of the Notary.

This meeting requires the following:
  • Buyer and Seller or representatives of each party must be present.
  • The final deed must be made in front of a Public Notary (similar to a solicitor/lawyer).
  • Contract is registered in the Agenzia del Territorio Servizio di Pubblicita Immobiliare.
  • All government taxes and fees calculated on the declared property value must be paid to the Notary ( We provide you with an estimate of these costs before you make any commitment to the property, so there are no unexpected surprises).
  • The deed is signed by both parties and the Notary.

After the signing of this contract it will be certified and you can expect to receive a fully certified copy within 4 weeks. The new owner receives this document which really is the Title Deed proving ownership of the property.

Buyer Costs before and during purchase
  • Property tax - Prima Casa. (First Home) If the property is to become your main home and you will obtain residency in Italy within 18 months you can purchase a house as Prima Casa and this will reduce the purchase tax payable on the declared (fiscal) value of the property from 7% to 3%.
  • Imposta di Registro - This is a fixed tax of approximately 340 Euros plus IVA (VAT).
  • Land taxes - 18% plus IVA (VAT) of the declared value on the land.
  • Notary fees - This is calculated on the sale value of the property from Euro 1000 upwards.
  • Translator fees - Usually 25 -30 Euro per hour. If you buy your property with us we provide the services of an accredited translator free of charge.
  • Architect (surveyor) fees - This is dependent on the work completed.
  • Our fee - usually 3% plus IVA (VAT).
We will provide you with an estimate of the total costs to purchase before you make any commitment to purchase a property.

Buyer costs after purchase
  • I.C.I (Imposta Comunale Immobili) - This is an annual tax between 0.4% and 0.7% on the declared fiscal value of the property. It is paid twice a year.
  • Rifiuti Solidi Urbani - This is a local waste/rubbish collection tax paid twice yearly.
  • Capital Gains Tax - If you sell your property within five years of purchase you must declare the amount of net profit you have made and may have tax to pay . The rules are complex and vary depending on whether you have purchased “seconda casa” “prima casa” and you future plans. We will obtain specialist legal advice on your behalf if appropriate.

Requirements of the buyer
  • Codice Fiscale - This is a form of National Insurance number that must be obtained before the purchase of a property. When you buy your property with us we do this for you free of charge.
  • Bank Account - The buyer must open a foreign Euro bank account. When you buy your property with us we can do this for you free of charge.
  • After purchase - All the utilities must be changed from the seller’s name to the new owner. We will do this for you free of charge.