Getting a mortgage in Italy
Through collaborations with Italian banks Terragente can help you with financing for your property purchase.
It is possible to get a mortgage in Italy as a non-resident, although not with all banks and the terms vary if you are not a resident in Italy. Of course the bank needs to be satisfied with is due-diligence to be able to grant you a mortgage on your property. The mortgage is a medium-long term loan, which typically lasts 5 to 30 years. Usually the customer receives the whole sum in a single solution and reimburses it in time with constant or variable amount installments. It is used to buy, build or renovate a building.
In general, the intermediary grants an amount on the basis of the value of the property to be purchased, usually up to 50 % of the value of the property as a non-resident (certain banks can go as high as 80% of the value of the property), established on the basis of the appraisal carried out by an independent technician, as well as the assessment of creditworthiness.
A fixed rate mortgage means that the interest rate remains fixed by the contract throughout the duration of the loan. The disadvantage is not being able to take advantage of any reduction in market rates that should occur over time. The fixed rate is advised to those who fear that the market rates can grow and from the moment of signing the contract he wants to be sure of the amounts of the single instalments and of the amount of total debt to be repaid. Faced with this advantage, the intermediary often applies more onerous conditions compared to the variable mortgage rate.
A variable mortgage rate means that the interest rate can vary at predetermined deadlines with respect to the starting rate because it follows the oscillations of a parameter reference, usually established on money markets. The main risk is an increase in the amount of the instalments. For the same duration, the variable rates at the beginning are lower than those fixed, but can increase over time, doing so increases the amount of the instalments, even to a substantial extent. The variable rate is recommended for those who want a rate always in line with the market trend and that can support any increase in the amount of the instalments.
A mixed mortgage means that the interest rate can change from fixed to variable (or vice versa) with fixed deadlines and / or under certain conditions indicated in the contract. Advantages and disadvantages are alternatively those valid for fixed rate or variable rate. Usually the benchmark for the fixed rate is Eurirs; for the variable rate the benchmark is the Euribor or the official rate set by the Central European Bank.
If the loan is granted by a bank, the customer pays a tax equal to 2% of the total amount, or 0.25% in the case of purchase as “Prima Casa”. The tax is retained directly by the bank, so the sum that the customer receives is less than the amount granted. Other costs that incur are the costs of preliminary investigation, the expertise fees, which may be required for evaluation of the property to be mortgaged, notary fees for the mortgage contract and the registration of the mortgage in real estate registers; the cost of the insurance premium to cover damage to the property and possible risks related to life of the customer who could prevent him from repaying the loan.
We will guide you through the mortgage process and get you in touch with banks. Remember to tell us at the beginning of your property search if you wish to ask for a mortgage since the timeframe from the request to finalisation will take some time.