How to purchase your Italian dream home...
Steps to buying a property in Italy with an Italian mortgage
Here is some helpful advice for buying a property in Italy and securing
your Italian mortgage.
Even before you find your Italian property, we can assist you by obtaining an
agreement in principle from our Italian panel of lenders. This will give you
confidence knowing that a panel of underwriters has already briefly assessed
your situation before you even go to Italy, and has agreed in principle to
provide you with a mortgage for your Italian property purchase.
1. Documents required at the early stages
When you select the property in Italy that you want to purchase, you need to
obtain:
- Copies of the planimetria/visura catastale (land registry documents)
- Atto Provenienza (the sellers proof of ownership document - proving they
have the right to sell the property).
These two documents are required by all banks in Italy before a property
survey can be undertaken. They should be available from the seller or the estate
agent (or developer if it is a new property).
2. The codice fiscale
The next thing you will need is the codice fiscale, or Italian tax code,
before you can do anything, including opening an Italian bank account.
This can be obtained in Italy at the local Comune (Council) where you are
purchasing the property or from the Italian Consulate in London or Edinburgh.
Other nationalities will also need to contact their Italian Consulate.
3. Italian bank account
The next step is to open your Italian bank account. Please be aware that due
to Italian law, opening an Italian bank account can currently only be done in
Italy.
You are best to choose a branch of the Italian bank that is close to where
you are purchasing (purely as this will be easier for you in the future). You
need to approach an Italian bank of your choice and ask for a standard current
account with a cheque book. The Italian banks usually have a product designed
especially for foreigners (conto corrente esterno).
It must be an account from which direct debits (RID's) can be made. You can
then arrange to pay all of your gas, electric, water and council taxes by direct
debit as well.
You can do this at any time when you are in Italy, from when you are looking
for your dream Italian property up until the signing of the notary, but it is
better and recommended to be done at the early stages.
4. Purchase and renovation mortgage details
On a purchase and renovation mortgage in Italy the valuer will carry out the
valuation on the property. Lenders will lend up to 80% of its current valuation
upfront before renovations. If the property is valued highly enough, the whole
of the advance can be done in one hit up front. If the valuation at the
beginning is not sufficient, then 80% can be released of its current value to
allow the purchase to go ahead and the rest once the renovations are completed
(subject to interim inspections, which cost 150 euros each on top of the 310
euros for the full initial valuation). Up to two further tranche payments can be
made on top of the initial advance. The lender will dictate how and when this
could be done.
The final inspection means that the lender can lend up to 80% of its new
valuation post renovation work. It does mean that clients have to fund the
renovations themselves in the first instance and then re-coup their out of
pocket spend once a proportion (if not all) of the work has been completed. In
order for the lender to give an idea of its value after renovation, the client
will need to submit full plans and estimates from their builder or
surveyor/architect with their mortgage application so that the lender has
something substantial on which to base his assessment.
You have decided to invest in Italy in a newly built or existing buy-to-let
property.
If you are looking for an investment property in Italy, We can help you:
- The maximum loan to value (LTV) you can obtain on your Italian mortgage
is 70%.
- The maximum term of the loan is 20 years.
- Loans for Italian mortgages are currently only available in Euros.
Renting your Italian property
Some items to be aware of if you are planning to rent your property.
- You may not be able to find a tenant for your Italian property all year
round. You will need to take this into consideration when working out the
affordability of the property you are considering
- Costs you may incur include cleaning and maintenance.
- You may be liable to tax on your rental income. You should always seek
independent advice from a tax expert.
With regards to closing costs in Italy on the purchase of your Italian home,
the general guideline is to allow 10% of the purchase price for property tax,
and a total of around 12% by the time you have included other things including
lawyers’ fees. You can request a breakdown of these costs from your lawyer.
All Italian mortgages need to be supported by proof of income documentation,
as non status mortgages in Italy are not available.
More on mortgage requirements |
