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Italian Mortgages: Getting a mortgage in Italy as a foreigner

In this overview, we will highlight for you some key information to be aware of, enabling you to get started on the process of securing a mortgage in Italy.

Written by Lauren Ross on 19 June 2020

In this overview, we will highlight for you some key information to be aware of, enabling you to get started on the process of securing a mortgage in Italy.

When trying to obtain a loan for the purchase of a property, many things can cause complications. Banks in Italy have always been strict lenders and being a non-Italian resident does not benefit this already lengthy process.

Types of mortgages and understanding the figures

Italy offers both variable rate and fixed rate mortgages. However, the majority of mortgages held in Italy (over two-thirds of the mortgage market) are variable rate. This is due to the fixed rates being  1% to 2% above the initial variable rate.

Application for an Italian property purchase would have to be made through an Italian bank.

Few banks offer international mortgages, so it is worth doing some research, while also acquiring the necessary professional advice, to make sure you find the terms and rates that are right for you.

Italian banks currently offer foreigners mortgages with the difference between the loan and the value of the property (LTV) of between 50-60% with, in most cases, a minimum mortgage agreement of €100,000. Italian lenders usually require a deposit of 40-50% for non-residents.

Expats that are purchasing properties to then be rented out should check with an Italian solicitor first, as Buy-to-Let mortgages are not available in Italy. This means that despite your bank lender not having any restrictions in terms of renting out property, there could be some local permissions or licences required to do so.

It is always recommended to speak to a professional if you are unsure of anything during the mortgage process, especially when overseas. We are able to connect you to an international mortgage broker with contacts in many Italian banks, to allow you to find the deal and information that you need.

What you need to provide to get an Italian mortgage

As well as the application form itself, Italian lenders require many other identification documents. Expats will be required to provide documents such as:

  • ID card or copies of your valid passports
  • The initial sale agreement
  • Income proof (consisting of your last three payslips, your last 2/3 tax certificates and a contract of employment)
  • Credit report
  • Proof of address (copy of recent utility bill)

This is not a speedy process and can take a long time to get all the above documentation verified, so collecting these forms of identification as soon as possible in the sale process would be wise.

How are my taxes calculated on my Italian purchase?

Cadastral value: This is an evaluated figure on which most of the property’s tax charges are calculated on. All properties are evaluated, which allows them to be given an official Cadastral Value. This valuation is based on location, quality and size of the property.

From the Cadastral Value, other charges such as Property tax, Government tax will be calculated.

Please note, the Cadastral Value allocated by the Italian Inland Revenue to the property is often lower compared to the market value of the property.