Obtaining a mortgage in Italy
as an American investor
- Ask for a Quote
Find out how much you can borrow and what it is likely to cost you. When you complete our simple enquiry form, we will be able to work out how much you can borrow and it will help you budget for your purchase in Italy. This quotation is totally free and confidential. - Get Pre-Approved for a Loan
If you prefer, complete more in depth pre-qualification service that will enable us to speak with our Italian banks on your behalf and obtain an initial pre-approval from them. With this information, you can start house hunting with more confidence. - House Hunting
Visit Italy to view properties - Choose the Perfect Property
When you find a property in Italy, you will probably be asked to sign a Purchase Proposal ( Proposta Acquisto) or even a
Preliminary Purchase Contract (Compromesso di vendita), agree on timings and pay a deposit.The purchase proposal is not usually legally binding and simply states your intention to buy, and the sellers agreement to sell, the property at an agreed price and date. The Preliminary Contract is usually legally binding if the conditions stated are met.If you don’t speak Italian, make sure that any contract you sign is also translated for you and that the clause “subject to mortgage finance” is in the agreement. This will cover you if something goes wrong with obtaining mortgage finance.
- Choose the Perfect Property
When you find a property in Italy, you will probably be asked to sign a Purchase Proposal ( Proposta Acquisto) or even a
Preliminary Purchase Contract (Compromesso di vendita), agree on timings and pay a deposit.The purchase proposal is not usually legally binding and simply states your intention to buy, and the sellers agreement to sell, the property at an agreed price and date. The Preliminary Contract is usually legally binding if the conditions stated are met.If you don’t speak Italian, make sure that any contract you sign is also translated for you and that the clause “subject to mortgage finance” is in the agreement. This will cover you if something goes wrong with obtaining mortgage finance. - Get Pre-Approved for the Mortgage
You will then need to submit a mortgage application. Each lender is different, but generally you will need to provide:- Signed application form
- Proof of income documents
- Bank statements
- Identification documents
- Property documents (these will usually be available from the selling agent)
We will provide you with a personalised list of required documents when you decide to proceed.
- Bank Meeting
Most banks require that you meet with them, in person, to sign the official mortgage application. This is for ‘Know Your Client’ (KYC) reasons. If this is necessary, we will arrange for an initial approval based on emailed documents, before you need to travel to Italy. For the actual meeting, we will arrange for you to be accompanied by our bilingual colleague so that you fully understand what is discussed. - Mortgage Approval & Survey
You should then receive an approval from the lender and a survey of the property will be arranged. Some banks will approve you and then do the survey on the property, others will inspect the property and then approve the full file. Depending on your circumstances and which bank is appropriate, we will let you know the expected process and timings. - Arrange Legals
You will need to open an Italian bank account and will need to arrange a date for completion, agree on a Notary and possibly arrange a translator for the legal documents and contracts to be signed / Power of Attorney - Completion
You will either need to visit the notary in Italy to attend completion, or arrange for a Power of Attorney (usually your lawyer) for completion and transfer of ownership of the property (Rogito).
Types of mortgages available in Italy
- Fixed-rate mortgages: These are the most common, offering repayment terms between 10 to 25 years, with 20 years being typical. Fixed rates provide payment stability but might be set at a higher rate than variable options.
- Variable-rate mortgages: Rates are tied to the Euribor rates plus a margin, offering less predictability over the long term but potentially lower rates initially.
Eligibility and borrowing limits
Foreign buyers can generally borrow up to 50-60% of a property’s value, though this is influenced by your income and overall debt. Your total monthly liabilities, including the mortgage, should not exceed 35% of your gross monthly household income. Italian banks typically require borrowers to have a deposit of 40-50% of the property’s purchase price.
Application
process
- Determine affordability: Start by understanding how much you can afford and consider getting a non-binding ‘Approval in Principle’ to understand your borrowing capacity.
- Gather required documents: This includes passport copies, proof of income, bank statements, and potentially additional documents if you’re self-employed or planning renovations.
- Select a mortgage: Consider consulting a mortgage broker to find the best rate. The application process can take anywhere from three to four months, depending on the complexity of your situation and how quickly you provide required documentation.
Additional considerations
- Notary and origination fees: Be prepared for additional costs, which can include notary fees and a mortgage arrangement fee, potentially adding 10-15% to the overall cost of purchasing a property.
- Specialist brokers: It might be beneficial to work with a mortgage broker who specializes in assisting foreign buyers. They can navigate the complexities of the Italian mortgage process, including language and cultural barriers, to find the best deal for you.
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