The real estate market in Italy provides a variety of investment opportunities as well as a large selection of homes in various settings, from rural homes in the northern Italian mountains to contemporary city apartments and beachfront properties. Many people aspire to move to Italy, buying real estate, and enjoying the vibrant culture and way of life there. The process of buying a property in a foreign nation, however, might not always be simple. This article will specifically discuss whether or not a foreign buyer of real estate in Italy is eligible to apply for a mortgage.
Interestingly, in Italy, over 70% of people own a property; this is due to a culture of passing property down to family members. In addition to this, high rent in some areas can make purchasing a property more attractive as the investment can be paid off quickly, and if you do not plan on living in Italy permanently, you can potentially use the property to earn an income. So, what do you need to know in order to get started?
What are the requirements to apply for a mortgage?
Both EU and non-EU nationals must provide evidence of identification in order to apply for a mortgage, but non-EU nationals must also present their permit of stay (permesso di soggiorno).
It is important to note that, as long as they satisfy the general criteria, the majority of Italian banks will grant mortgages to non-residents. However, banks can also be very careful, so you must offer enough proof to show that you are a low-risk borrower.
Inferring from this, there are a few crucial factors that can favorably affect the result of a mortgage application. For instance, if a foreign national has lived in Italy for three years previous to buying a property, mortgages are more likely to be granted. The so-called “ricongiungimento familiare” (family reunification) is another significant element. In other words, the probability of getting a mortgage will rise if a foreign national moves to Italy with the intention of living there with some of their family members.
How do you apply?
Due to the economic crisis and the new Anti-Money Laundering Regulation (Regolamento Antiriciclaggio) Italian banks and credit institutions have developed a three-stage process in order to grant a mortgage. As explained by Idealista, arguably one of the most well-known real estate companies operating in Italy, Spain and Portugal, the following steps apply to both Italian and foreign citizens:
- The bank studies the potential client’s credit history. The applicant is required to submit several documents, among these an ID card or passport, proof of address (e.g., a copy of a recent utility bill), the property’s contract of sale, proof of income (e.g., the last three paychecks, tax return documents and employment contracts), and a credit report. The bank will then assess these documents in order to determine the individual’s eligibility to apply for a mortgage.
- A surveyor appointed by the bank will evaluate the property’s conditions to certify that it is mortgageable, and to determine the value on which the mortgage rate will be based. This information will be listed on the Evaluation Report drafted on the day of the inspection.
- If all of the requirements are met the bank will issue the applicant a formal mortgage approval.
It is worth pointing out that as you set your total budget, you will need to take a few taxes and fees into account, namely the registration tax, VAT, the land registry tax, the notary, the translator and the estate agent’s fees. More information about these can be found here.
How long does it take to get a mortgage?
According to the data reported by Idealista, it takes from 20 to 60 days to for a mortgage application process to be completed. There may be instances in which it may be possible to make a formal offer on a property by stating that the buyer will request a mortgage if the offer is accepted. However each case is unique and thus it is worth seeking the assistance of a real estate and mortgage specialist.
How much are properties in Italy?
The price of a property in Italy varies greatly depending on its location and the property type. For example, you could pay as little as €25,000 for an apartment in a small village in Sicily, but you should expect to pay much more if you go property hunting in cities like Milan or Venice, for instance. Finding the perfect place to purchase property in Italy will always be a balance of budget, lifestyle and location but if you contract an agent or a lawyer in Italy they will be able to provide you with a number of options, as well as with guidance and support in order to avoid any potential scams. If you would like to learn more about the mistakes to avoid when purchasing a property in Italy, please click here.
In conclusion, this article has sought to provide a few useful pieces of information one should know when applying for a mortgage. However, please note that each application is unique and therefore, if you would like to speak to one of our representatives to understand which options apply to you, do not hesitate to contact info@italianrealestatelawyers.com. We will be glad to help you.
