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Italian Mortgage Information

Loans are available up to 80% of the mortgage valuation. Italian banks lend only on the basis of a mortgage valuation: this is carried out by a valuer on behalf of the lender, which you pay for and costs around €300.

 

Once you have found a property you wish to purchase, you must sign the reservation agreement. The preliminary agreement or compromesso is a binding legal document obliging both parties to complete the purchase at a future specified date in the offices of a local Notary Public. At this stage you have to put down a 10-30% deposit, which you forfeit if you pull out of the purchase. If the vendor pulls out, they must pay you twice the sum they received as a deposit. If the transaction reaches completion, the deposit is taken as a down payment.
You should stipulate that the purchase is conditional on you obtaining a mortgage, a satisfactory survey, and that the property is free from all charges and complies with building regulations.

 

Fees

 

Check what legal costs and government taxes you are liable for before committing yourself. Italian bank fees vary but are typically around 1% of the mortgage amount. You should also allow around €500 for the mortgage valuation and stamp duty of 11% on urban property or 17% on agricultural land. There is also a charge for registering the lender’s interest with the land registry. If the vendor is a private individual, you must pay a further registration tax of 3-4% of the purchase price if you move in within 18 months, or 10% if you plan to use the property as a second home. If the vendor is a company, you must pay imposta sul valore aggiunto or VAT.

 

Completion must be formalised by a local Notary Public who draws up the sale deed, registers it with the land registry and pays all taxes and duties on your behalf. Once you receive your offer of mortgage in writing you must sign and return the papers to the lender dated the day you receive them. You will normally, then be able to complete on your purchase after a cooling-off period of around 10 days.

Don’t forget that if you do not plan on being in Italy for the completion, you MUST ensure you have a viable Power of Attorney in place, within good time.