Getting
A Mortgage In Italy
Should
I Get A UK or Italian Mortgage?
There
are no restrictions on foreign ownership of property in Italy,
nor is there any requirement to use an Italian mortgage to purchase
your property.
If you are planning to buy in Italy, you have two main choices:
- Take
an Italian mortgage, normally in Euros (either
through a UK lender or direct with an Italian bank)
- Remortgage
or secure an additional loan on a UK property and use this
money to buy your Italian property for cash
Both approaches have advantages and disadvantages. Here are a
few things to think about when deciding what's best for you:
- Having
a mortgage in a foreign currency means that
your payments will change with the exchange rate - over 10-15
years, this can result in significantly increased (or decreased)
monthly payments, even with a fixed-rate mortgage. For this
reason it can be wise to make sure all your loan payments
are in the same currency as your income.
- Italian
mortgage lenders
have more conservative lending policies than UK lenders. You
may find it harder to get an Italian mortgage than to secure
an additional loan on your UK property.
- Historically
Eurozone interest rates have been slightly
lower than UK rates, making Euro mortgages cheaper. There
is no guarantee that this will continue to be true.
One of the best ways of finding out where you stand is to contact
a specialist independent mortgage broker in the UK to discuss
your options. They should be able to look at your personal circumstances
and explain what choices are available to you and how much you
can afford to borrow.
Getting A Mortgage In Italy
The
Italian mortgage market has expanded considerably in the last
few years, but is still relatively conservative and restricted
compared to the UK market.
Italian mortgage lenders will normally only
offer mortgages of up to 60%-80% LTV (i.e. 60%-80% of the purchase
price) and there are no self-certification or non-status mortgages.
Mortgages will typically be over a 15 year term, rather than
the 25+ years UK lenders expect. Most lenders will also require
you to have paid off your mortgage completely by your 70th birthday.
Lending decisions are based on affordability:
-
Your existing outgoings must be no more than 40%
of your net monthly income
- Your
mortgage will be calculated so that your monthly payments
are no more than 30% of your net monthly income
Fixed-rate loans are the norm in Italy, which often results
in quite competitive long-term interest rates.
If Your're Employed
If you are employed, you will need to provide the following
documentation when applying for an Italian mortgage:
- Last
3 months' payslips
- Last
year's P60 and/or a reference from your employer
- Last
6 months' personal bank statements
If You're Self-Employed
As the Italian lenders do not offer self-certified or non-status
mortgages, self-employed mortgage applicants will need to show:
- Copies
of your last 2 years' audited accounts
- Last
12 months' business bank statements
- Last
6 months' personal bank statements
Rental Income
Italian mortgage lenders will not take potential
rental income into account when calculating what to lend you.
You must be able to afford the property without its rental income.
Read
On
•
Introduction
• Buying A Property
In Italy – 4 Easy Steps
• Should I Get A
UK or Italian Mortgage?
• Getting
A Mortgage In Italy
• Other Things To
Check When Buying In Italy
• Glossary of Important
Italian Property Terms
Buying
Overseas Property and Mortgages
