Getting a mortgage in Italy
By Stefania Russo of The Property Organiser
Exchange rate fluctuations mean that if you're buying a property in Italy, it makes sense to get a mortgage there as well. But just how likely are Italian lending institutions to grant home loans to non-nationals? It's a question clients ask me all the time.
The Italian system has no self-certification mortgages, so if you are applying for one you will need to provide proof of your earnings. For people who are employees, that means three months of wage slips and six months of bank statements. The self-employed on the other hand must show three years of audited accounts, 12 months of business bank statements and six months of statements from your personal account.
Be aware that while considering whether or not to grant a mortgage on a property, Italian banks take no account of its potential earnings from rentals.
They typically give up to 80% mortgages, with a maximum loan term of up to 40 years. However, if you are embarking on a restoration project or new-build, the maximum mortgage is typically 70% of the final property value or 80% of the cost of the restoration work. Funds will be released as work progresses.
For a construction, the maximum loan is usually 70% of the final property value. The first payment will be released once 50% of the work has been completed (typically, outside walls & roof finished) The lender will request your surveyor's reports at each stage.
Before an Italian bank gives you a yes on any type of mortgage application, they will assess your net income and outgoings (existing mortgage/rent payments, credit card repayments, etc). These outgoings will have to remain under 45% for a reasonable chance of your mortgage going through. Italian lenders offer interest-only and repayment mortgages on a variable or fixed-rate basis, or a combination of both.