Buying in Italy

Mortgage products



Location:                      Mainland Italy only.

Type of Loan:              Repayment for purchase or remortgage. Interest-only loans are available 
                                    but rare.

Purchaser:                   Individuals or companies.

Min loan amount:         €100,000.

Max loan amount:        None, but must not exceed 70% of mortgage valuation or purchase price
                                    (whichever is lower).

Term:                          5 to 25 years up to age 75.

Currency:                    Euro only.


Fees

Italian bank fees vary but are typically around 1% of the mortgage amount. You should also allow around €500 for the mortgage valuation and stamp duty of 11% on urban property or 17% on agricultural land. There is also a charge for registering the lender's interest with the land registry. If the vendor is a private individual, you must pay a further registration tax of 3-4% of the purchase price if you move in within 18 months, or 10% if you plan to use the property as a second home. If the vendor is a company, you must pay imposta sul valore aggiunto or VAT.

Lending criteria

There are two main criteria for determining how much you can borrow: the value of the property and your financial situation.

Most Italian lenders take into account your existing liabilities, including mortgage/rent payments, personal and bank loans, and maintenance payments. When these are added to your proposed Italian mortgage payments, the total must not exceed 40% (this percentage can vary) of your net monthly income. For example, if you have a UK mortgage of £200 a month, a car loan of £50 a month, and the proposed Italian borrowing is £250 a month, your gross monthly pay must be at least £1,250 or the lender will reject your application.

Proof of income is required by the lender. This can comprise earned income, pension, investment or rental income. However, not all lenders take all of these into account when determining how much you can borrow. Italian lenders also won't take into account any potential rental income from the property you are buying.

Savills Private Finance (SPF) has arrangements with a number of Italian lenders, offering minimal and bespoke underwriting terms and conditions.

Insurance

It is advisable to set up a life assurance policy when taking out a mortgage. Buildings insurance is compulsory and often sold by the lender. SPF can provide independent advice for all your insurance needs.

Valuation

Loans are available up to 70% of the mortgage valuation. Italian banks lend only on the basis of a mortgage valuation: this is carried out by a valuer on behalf of the lender, which you pay for.

Legal issues

Once you have found a property you wish to purchase, you must sign the reservation agreement. The preliminary agreement or compromesso is a binding legal document obliging both parties to complete the purchase at a future specified date in the offices of a local Notary Public. At this stage you have to put down a 10-30% deposit, which you forfeit if you pull out of the purchase. If the vendor pulls out, they must pay you twice the sum they received as a deposit. If the transaction reaches completion, the deposit is taken as a down payment.

You should stipulate that the purchase is conditional on you obtaining a mortgage, a satisfactory survey, and that the property is free from all charges and complies with building regulations.

Check what legal costs and government taxes you are liable for before committing yourself to a purchase or remortgage.

SPF endeavours to secure the loan on your property within your preferred timescale but delays may occur owing to the Italian legal and administrative system.

Completion

Completion must be formalised by a local Notary Public who draws up the sale deed, registers it with the land registry and pays all taxes and duties on your behalf.

Applying for a mortgage

It is advisable to arrange a mortgage in principle before committing to a purchase. This will enable you to find out how much you can borrow, so you don't waste time looking at properties beyond your budget. Even if you haven't found a property that you wish to buy, our international division can establish your affordability and issue an approval in principle based on your current financial situation.

If you have already found a property to purchase, we will send you a full application pack via email or in the post. If the property is still under construction, we can keep your file open until you tell us it is ready.

Should you require funds to put towards a deposit, or if you don't qualify for an Italian mortgage, we may be able to help raise finance for your proposed property.

Enquire now          Mortgage Calculator