international mortgages

italy

Essential information for buying properties in Italy

Buying property abroad is not necessarily the same as buying in the UK, there is other essential information you need to be aware of both before and during your property purchase.

It is of paramount importance to seek independent advice from a lawyer specialising in Italian law prior to signing the preliminary contract / Compromesso, or paying a deposit

You need to ensure that you will have full title to the property on completion and that you have the appropriate documents available for the lender.

The bank will require a copy of the signed preliminary contract or “Compromesso with the relevantapplication form. However, before signing the contract ensure that you are able to sign this with the clause “subject to mortgage finance and valuation” as the contract once signed is legally binding.

You should check with the estate agent and/or your lawyer that you are aware of the costs charged by legal and Government authorities for buying an Italian property. The lender will also have their own legal costs for assigning the loan, the cost of which they will normally advise you when they issue the mortgage offer. These associated fees/taxes are typically between 10% - 15% of the properties purchase price.

A tax code is mandatory for purchasing a property, known as a fiscal code. Your solicitor will advise you on obtaining one. Please note that the Lender will need a copy of the certificate with your application.

All properties must be in a habitable condition, with constructed roads as access.

Be aware that the Notaire may be incorporating costs for assigning the mortgage within his charges. Establish the actual cost before proceeding with a loan application.

Unless you understand Italian well enough to respond to the Notary, he is obliged to call upon the services of a qualified translator, because the law states that you must understand what you are purchasing. The cost of the translation services will be paid by you. Alternatively, you may wish to grant a power of attorney to a representative of your choosing, who is fully conversant in Italian.

An Italian Bank Account must be opened and details provided to the Lender prior to completion

The first stage in buying a property in Italy is usually the signing of a purchase proposal this is drawn up and presented to the seller. On acceptance of the offer a preliminary contract is drawn up “Compromesso di Vendita” on the signing of this contract both parties are bound by the transaction so it is important any clauses are included at this stage.

The contract will include the closing date for completion and all conditions that must be fulfilled for completion. The timescale from signing the contract to completion is usually between 6 to 8 weeks. At the point of signing the initial contract a deposit of between 10 to 30% will be taken.

It is important for clients that the contract always has a mortgage clause which protects the deposits should a mortgage not be obtained. Independent legal advice should always be taken. Any mortgage clause should include what level of funds you will require, anticipated interest rate and lender if known. If the client has not already arranged the mortgage in principle the contract will give the specified time a client has to arrange the lending.

A soon as possible after signing the initial contract a fiscal number “Codice Fiscale” should be obtained as this will be necessary to present to the Notary at completion and will be needed for formal offer purposes by the bank.

It is possible to arrange a mortgage in principle prior to finding a property but a formal offer will not be available until after a bank valuation has taken place which will be after the signing of the initial contract. For valuation the banks will require a copy of the “Compromesso”, copy of the property plans, the fiscal number and the last sale title deeds. The property must comply with all municipal laws and have planning approval from the local authority.

Each property in Italy has a legal or declared price placed on it by the government this may differ from the purchase price and is the basis on which taxes are assessed. It is wise to ensure the declared price at Notary is alt least the local land registry price. Completion is always undertaken at the Notary.

Total costs of purchases are high in Italy and include.

Stamp duty
Notary fees
Mortgage tax
Estate agency fees
Registry fees
These fees dependant on property can be as high as 15 to 20% of the property purchase price.

Mortgages are available for mainland Italy well as Sardinia.

Eligibility and criteria

Loans available in Euros only.
Loans are only available on a repayment basis
The maximum loan to value for a purchase is 80%
Applications for remortgages or Home Improvements are assessed on a case by case basis.
The maximum term of any mortgage is 40 years (to age 85 maximum)
The minimum loan amount is €80,000 with no maximum

Affordability

To qualify for a mortgage in Italy, a calculation is used to establish whether you can afford to maintain the mortgage repayments. This will automatically happen when you complete our enquiry form, and we won’t charge you for this service.

Your existing liabilities, including your UK mortgage or rental payments, loans, credit card payments and maintenance are taken into account, together with the proposed Italian mortgage payments. All this must not typically exceed 35% of your monthly gross income. For example if your gross joint income is £2500, 35% of this equates to £875. If your only liability is your current UK mortgage payment of say £300 per month, this would leave a balance of £575 for your Italian mortgage repayment.

The amount that you can borrow is also restricted by the maximum loan to value as mentioned under Eligibility and criteria.

Proof of income requirements

If you are employed:

Your last two month’s payslips
Your last two P60’s
Your last six month’s personal bank statements

If you are self-employed:

Your last three year’s audited accounts & last two years tax returns
Accountants declaration.
Your last 6 month’s personal and business bank statements

If you would like to speak with a representative to discuss your requirements please call +(34) 677 874 948