Getting a mortgage in Italy: requirements & useful tips

What are the Italian mortgage rates and types?

Getting a mortgage in Italy as a foreigner can be a lengthy process. You should make sure you’re clear on what is required of you to secure an Italian mortgage, as well as a good idea of precisely which one you’re after. As in the UK, mortgages generally break down into two categories:

• Variable — as of 2019, the mortgage rate in Italy was around 1.44% interest
• Fixed-rate

You may specifically need to look into international mortgages, which can be harder to find, and are less likely to be fixed-rate — the majority of mortgages in Italy aren’t. If you plan to rent your property.  Italy has no ‘buy to rent’ mortgage like in the UK.

Italian mortgages also generally run shorter than in the UK, where a common term is around 25 years. In Italy, it’s closer to 15 years, so don’t be surprised if you’re hit with much higher monthly costs. A standard mortgage for Italian property is around 60% LTV (loan to value), meaning you can’t head into a sale with a 10% deposit like you can in the UK.

Requirements for getting a mortgage in Italy

To secure an Italian mortgage for non-residents, you will need:

• Your passport
• An initial sale agreement on the property you wish to mortgage
• At least three recent payslips, proof of employment and tax certificates
• Proof of your current address
• A credit report

You will also need a local bank account, which requires a codice fiscali, or tax number. If you aren’t able to be in Italy in person, there’s a very low chance of you securing this. However, you can give power of attorney to a local lawyer to open an account on your behalf. While pricey, getting a professional to help with the first steps to getting a mortgage and beyond will likely pay dividends.

The bank will request a property valuation by an independent company to define your mortgage offer's risk. If the bank is satisfied with the property value and your mortgage offer, you will be able to open a mortgage for property in Italy.

What to keep in mind when getting a mortgage in Italy as a foreigner

The process for an Italian mortgage for non-residents is generally stricter (and slower) than for residents. As a non-resident, you may also want to look into Italian mortgages that can be charged in your local currency (such as pounds) rather than euros, which can cause your UK-based bank to charge extra processing fees. It’s highly recommended you turn to a local professional who is well versed in the steps of getting a mortgage in Italy as a foreigner, as this will save you from small mistakes that may become costly down the road.

How to get a mortgage in Italy step by step

Get a codice fiscali

If you want to do anything concerning money in Italy, you need your tax number. You can acquire this from your local tax office.

Open a bank account

You will likely need to do this in person. Again, getting a local professional to help you find the best bank for you so far as mortgages are concerned is recommended.

Don’t buy until you know

Mortgages are not easy to acquire in Italy as a non-resident. Do not agree to buy anything until you are sure a bank will support you with a mortgage offer — again, a local professional well versed in the process of getting a mortgage as a foreigner will be indispensable.

Make sure you can afford it

The general process for mortgages in Italy is not too different to the UK, but the mounting costs certainly can be and the shorter mortgage term. Take a good look at all the fees and details involved, including the monthly cost of the mortgage, the deposit you need and the taxes you will face. There will also be extra fees with surveyors, lawyers, and your actual moving costs.

Apply for a mortgage

The bank will decide if they want to offer you a mortgage based on the property you have in mind.

Sign up

If you have an offer made by the bank, and you know you can afford it, this is where you can sign on the dotted line and start your new life as an Italian homeowner!

Tax considerations for Italian property mortgages

When budgeting for a home and looking into how to get a mortgage in Italy, remember that certain taxes will be charged on your property. Registration tax for a primary residence is charged at 2% of a property’s value (as deemed by your local council and often lower than market value) and 9% if it is a secondary home, investment or bought as a holiday rental. Tax is also charged on your mortgage value — 2% if it is a secondary property or 0.25% for your main residence.

Start a new life in Italy and find your perfect property with Kyero!