Q Question: Can a non Italian resident get an Italian mortgage?
A Answer: Non-Italian residents are allowed to get Italian mortgages on Italian properties. Some Italian banks offer mortgages to non-residents who want to buy and/or refurbish an Italian property.
After the 2007/2008 global financial crisis Italian bank policies for mortgages to non-Italians got stricter. However, recently several Italian financial institutions set up some options to do business again in this area. They might lend up to 50-60% of property value.
An Italian mortgage loan to a non Italian resident might be granted in euros or in a foreign currency. Several of our U.S. Clients an Italian loan in US dollars to buy an Italian property.
When planning to apply for a mortgage you shall consider the involved costs such as, for example, mortgage application fee, broker fee, mortgage taxes, appraisal, notary fees, home insurance and interpreter fees, if the borrower does not speak Italian.
Mortgage approval success chances, evaluation parameters, loan amount, timing and cost depend on several factors, such as applicant’s nationality, domicile, personal conditions (e.g., employment and financial status) and property conditions. A mortgage broker might help you select the financial institution that best fits your specific case circumstances and needs.
Once you file an Italian mortgage application to buy an Italian property, it takes eight to ten weeks to complete the process and receive the loan amount. If getting the mortgage is a contingency for you to proceed with the purchase, get a mortgage pre-approval before you commit to the property investment. The Italian mortgage process involves the following steps:
1) Personal solvency check: bank review of your personal financial information and property information – a day or two;
2) Pre-approval mortgage application: preparation, submission and pre-approval outcome – three days to two weeks;
3) Property compliance check: a surveyor (appraiser) appointed by the bank inspects the property and issues a compliance and evaluation report for the bank – two to three weeks;
4) Title check: a notary appointed by the borrower reviews the property title and issues a title check report for the bank – one to two weeks;
5) Final Mortgage Approval: subject to satisfactory solvency check, property compliance check and title check by the notary, the bank issues a formal mortgage approval – one to two weeks;
6) Funds release: After mortgage approval, bank and borrower agree on a signing date. In a mortgage loan asked for a property purchase, the borrower signs the purchase contract and the mortgage contract in front of the same notary within the same notary signing session. Depending on the policy of the mortgage institution, they might release the mortgage funds at signing or upon confirmation (from the notary) of title transfer registration in the Public Land Register (Register of Deeds), which might take two to four weeks after completion.
As a condition to complete the mortgage process the bank might insist that you open an Italian bank account with them to set up automatic mortgage payments. Since this is not a legal requirement, you might be able to discuss options with them, such as using an Italian bank account you already have or are planning to open with another bank, or make direct payments to the bank through your home country bank account.
Also, recently some banks ask that the borrower is physically present at final signing and make this a deal-breaker. In the past we have completed many mortgages on behalf of our clients based on a Power of Attorney. However, for some banks this will no longer be an option. Therefore, if you do not care for sitting in a notary office for two hours plus for mortgage signing, remember to ask for the applicable signing policies when selecting the preferred mortgage institution.
You can save on mortgage process time and costs if the owner already has a mortgage on the property. In particular, if you are happy with the terms of the existing mortgage you might be able to undertake (assume) it at no cost and no fee. This might be a very interesting opportunity for some buyers. By way of example, if you assume an existing loan of EUR 50,000 loan, you would save approximately EUR 5,000 compared to getting the same loan through a standard mortgage application process.
Follow us on LinkedIn for more on this topic
- Loan Options for Italian Real Estate
- Property Purchase: Do I need an Italian Bank account?
- Joint or individual purchase: tax implications
- Purchasing jointly with my spouse or separately?
- Purchasing in a condominio building
- Property taxes
- Double taxation
- VAT on Italian property purchase
- Income Tax
- Italian property purchase taxes
- Inheriting seller’s debt
- Vendor’s solvency affecting the buyer
*The information presented in the Studio Legale Metta web site has been written and reviewed by Italian lawyers. However, it should not be construed to be legal advice, nor promotion of the establishment of a relationship between lawyer and client. The case studies and answers contained in this web site pertain to the specific situation referenced and should not be understood to generally apply to other circumstances. Persons accessing this web site are encouraged to seek independent counsel for advice concerning their individual needs for legal assistance.
Copyright of Studio Legale Metta – Bari (Italy).