In the past few years the idea of moving to Italy has captured the imagination of many people who have decided to purchase a property in Italy either to spend their holidays there or to relocate to the country. Purchasing property is not always a straightforward process and even more so if you are unfamiliar with another country’s real estate market and its rules and regulations. There are a lot of questions people often ask themselves when looking into buying a property in Italy but one of the most frequently asked questions is whether a foreigner can apply for a mortgage in Italy. If this is something that you have been asking yourself as well this article will provide you with some useful pieces of information.
First of all, as a recap, there are two things you need in order to purchase a property in Italy, namely:
- An Italian Tax Code: this is an alphanumerical code which is unique to each individual. Foreign citizens can apply for an Italian Tax Code at any Italian Consulate abroad or at a Revenue Agency office in Italy.
- A bank account: you do not need to open a bank account in Italy in order to purchase a property as you can use your bank account in your home country.
Having said this, there are three factors that banks take into consideration when a foreign citizen wants to apply for a mortgage:
- Income
Banks must ensure that the person applying for a mortgage will be able to pay it back. This is the reason why banks evaluate primarily the applicant’s source of income. In order to do so they require the following documents: the applicant’s current employment contract and his or her paychecks.
- Residency in Italy
Banks want to make sure that the borrower will reside in Italy throughout the period of time needed to pay back the mortgage. In this sense, only non-EU citizens who are currently residing in Italy and have lived in the country for 2 to 5 years usually obtain a mortgage. This is the reason why banks require the applicant to provide his or her certificate of residency.
- Family reunification
If an individual moves to Italy with his/her family, it is very likely that they will intend to stay in the country for a long period of time. Therefore, banks will be more flexible and might allow the individual to apply for a mortgage. As for the documents required, the bank will require the couple’s marriage certificate, proof that they receive a monthly income and their certificate of residency.
Please note that the requirements listed above might change depending on the specific bank you apply to but as a general rule they represent the key criteria that banks use in order to determine whether an applicant is eligible to apply for a mortgage. If you do not meet any of the requirements listed above, there are other ways to purchase a property, namely:
- Rent to own
This option allows an individual to lease out a property for a set number of years and keep the option of buying it before the tenancy agreement is over. The monthly rent is usually 15-25% higher than a normal rent because a part of it includes the deposit which will be deducted from the purchasing price once the renting period is over. This option has become more popular since it was regulated in 2014 because it allows individuals who do not meet the requirements to apply for a mortgage to still be able to purchase a property.
- “Conditional sale”
This type of sale is defined in Italian as “Vendita con riserva di proprietà”; it allows the buyer to live in the property while paying the purchasing price in installments. The seller keeps the ownership of the property until the last instalment has been paid.
** please note that some sellers might not be familiar with these purchasing processes so as a general rule it is always advisable to contact the seller to verify that he or she offers the purchasing options explained above.
In conclusion, we hope that this article has clarified any doubts you might have regarding applying for a mortgage. If you need further information feel free to contact us at: info@italianrealestatelawyers.com
