Type of loan
Repayment finance is available for the purchase and the loans are in Euro.
Purchaser
Purchasers in Italy can be individuals or companies.
Loan size
The minimum loan size on an Italian mortgage is €250,000. Generally the loan must not exceed 80% of the mortgage valuation or purchase price (whichever is lower) and there are areas in Italy where the maximum loan-to-value is much lower. For loans of €2,000,000 and above the loan-to-value will be assessed on a case by case basis.
Term
5 to 25 years up to age 70.
Fees
Italian bank fees vary but are typically 1% - 1.5% of the mortgage amount. Valuation fees are usually payable by the client and are approximately €200. There is a further charge for registering the lender’s interest with the land registry which is approximately 2% for non-residents.
Lending criteria
Understand Italian mortgage lending criteria with SPF.
Lenders determine how much you can borrow by taking into account your financial situation and the value of the Italian property.
Most Italian lenders take into account your existing UK 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 if you are employed. For example, if your UK mortgage is £200 a month, car loan £50 a month and the proposed Italian mortgage is £250 a month, your net monthly pay needs to be at least £1,250 or your application will not be successful. N.B different criteria apply when you are self-employed and you should discuss this with your consultant.
Italian lenders require proof of income. This can be earned income, pension, investment or rental income. However, not all lenders take all of these into account. Italian lenders will not take into account any potential rental income from the property you are buying.
SPF has arrangements with a number of Italian lenders, offering minimal and bespoke underwriting terms and conditions.
Insurance
Italian property insurance advice from SPF.
Buildings insurance on Italian property is compulsory and often sold by the lender. But you don’t have to buy your buildings cover from an Italian mortgage lender: SPF can provide independent advice for all your insurance needs.
It is also advisable to set up a life assurance policy to cover your protection needs when taking out a mortgage in Italy. SPF can advise on this.
Valuation
Understand Italian property valuations and their bearing on mortgage loan amounts.
Italian banks will lend up to a maximum of 80% of the mortgage valuation or the purchase price whichever is the lower. A valuation is carried out by a valuer on behalf of the bank and you will usually pay for this even if you do not receive a copy. The condition of the property is not covered in this so for a comprehensive report you should consider paying for a separate, more detailed survey.
Legal issues
Italian property laws and legislation.
Once you’ve found the Italian property you wish to purchase, you must sign the reservation agreement or compromesso. This is a binding contract between buyer and seller to complete the purchase at a specified date in the offices of a local Notary Public. At this stage you must put down a deposit of between 10 and 30%, which you forfeit if you pull out of the purchase. If the vendor pulls out, they must pay you twice this sum.
Ensure you stipulate that the purchase is conditional on you obtaining a mortgage, a satisfactory survey and that the Italian 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.
Completion
Italian mortgage loan completion information.
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.
Legal ownership is transferred to you. The seller will hand over the keys and you will become the new official and legal owner of an Italian property. Congratulations!
Apply for a mortgage
Applying for a mortgage to buy a property in Italy.
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 only look at Italian property within your budget. Even if you have not yet found a property in Italy, the SPF international team can help you establish your affordability and issue an approval in principle based on your financial situation.
If you have already found an Italian property, SPF will send you an application pack.
Should you require funds to put towards a deposit, SPF has a range of options to help raise finance for your proposed property in Italy.
Contact SPF on +44 (0) 20 7877 4710 or email international@spf.co.uk