Italian Morgage: everything you need to know
If there’s any product worth investing in, it’s real estate. You don’t have to be Italian to apply for a mortgage on an Italian property though rules became more strict in the wake of the 2008 Financial Crisis.
More recent changes have made it so that those, even non-residents, who wish to purchase real estate in Italy can borrow between 50-60% of the property’s value; if you happen to be an Italian resident you can borrow up to an maximum of 80% as no mortgage can cover 100% of a property’s value. This decision is ultimately up to the bank and is decided on a case by case basis.
Mortgage rates on Italian properties are extremely low, around 1%, nearly one-third of those in the United States.
On the downside, you’ll likely need a lawyer to assist you in the process acting on your behalf as many Italian processes require your physical presence.
Be aware that all documents in the process are required to be certified and drafted in Italian. Mortgages to non-residents can also be governed on the principle of reciprocity which means that if conditions in the country of origin are favorable to Italians then those same conditions can be applied to the foreigner (as is the case with US-Italian relations). These are examined, again, case by case through the Foreign Ministry.
When applying for a mortgage you should consider other applicable fees for the: mortgage application, broker, notary and home insurance as well as mortgage taxes and appraisal.
It’s also worth noting that both residents and non-residents are eligible for heavy tax breaks when purchasing their first property in Italy.
Additionally, chances of mortgage approval success, loan amount, timing and cost depend on several factors: personal conditions and property conditions, domicile, and even the applicant’s nationality.
It takes eight to ten weeks to complete the mortgage application process and receive the loan amount if approved. There are generally six steps in the Italian mortgage process:
Steps 3 and 4 ensure that the property is adequately inspected by all parties.
Italian banks may insist that you open an account with them to set up automatic mortgage payments although this is not legally required, so it can be negotiated.
As a side note, if the current owner already has a mortgage on the property and you are happy with the terms of the existing mortgage, you might be able to undertake it with no cost or fee. This can work out well for everyone involved.
Check also our video about buying a house in Italy.
Want to read more? Check out also our articles about filing your taxes in Italy, or airbnb taxes in Italy, or our guide for retiring in Italy.
After moving back to Italy from the United States in 2013, I realized how much an accounting and tax firm was needed to help expats living in Italy to comply with the local tax regulations.