The Buying Procedure

Getting a mortgage

The obvious attraction of buying a house in the sun together with its investment opportunity is encouraging more and more people to buy with a mortgage.  Foreign (non-Italian) banks are often reticent about lending money on a property abroad, and rates are high.  The current mortgage rates offered by Italian mortgage providers of about 4-5% are very favourable to borrowers and many people decide to obtain a mortgage with a provider in Italy rather than take savings out of high interest accounts in the UK and elsewhere.
 
However, the Italian mortgage procedure is very long and protracted...no surprise there!  This makes vendors somewhat edgy about accepting an offer 'subject ot obtaining a mortgage' when, after three months of waiting, the sale may not then go through because the mortage wasn't granted.  If this happens in the autumn it is likely that the vendor will have to wait until the following year to effect a sale.  We are finding that many vendors will not accept an offer on this basis.
 
Further compounding the problem, many mortgage providers will not usually sanction a mortgage until after the Compromesso has been signed.  This is the deposit stage of the sale when you turn over 20% of the agreed price and the sales contract is done and binding.  Hardly a good time to get a mortgage refused. However, you need to budget for the fact that you will, in any case, only get a maximum of 80% of the house price as a mortgage, and therefore would have to find the 20% for the Compromesso.
 
Banks also only grant mortgages of up to 70% (80% in certain circumstances) of their valuation of a property.  So, you may see a property for sale at 200,000 euros and find that the valuation is only 180,000 and the mortgage will only be 126,000...quite a shortfall, especially when you take charges, fees, taxes and fluctuating exchange rates into consideration as well. Budgeting is extremely important!
 
So what's the solution?There are two -
1.   We have been quietly working behind the scenes to overcome this problem.  We work with two banks for client mortgages, Banca Monte Paschi di Siena (which has a large branch in London) and Unicredit Banca (previously known as Banca dell'Umbria).  We are trying to get a mortgage amount pre-approved based on your income.  So, if the bank pre-approves an amount of say 200,000 euros you will know that you can go shopping for a house with a certain peace of mind having done the calculations beforehand. This still takes time, but the rates are good.
 
2. We put clients in touch with an excellent company in England, who are mortgage brokers and who have both English and Italian speakers in the mortgage department. They will broker the whole mortgage for you, every step of the way, and their fee is very small. Please ask for details. We have several clients who have used this service and they would recommend it to you personally if required.
 
If you decide to go the route of the Italian mortgage then we charge you 25 Euros per hour for this service, Otherwise there is no charge if you take the broker route.There will be a fee for the bank valuer, which is usually about 300 euros.  If you need full translation of the mortgage contract or deeds, we can provide qualified translators from Polyglot, a licenced translation and interpreting agency.

For an official mortgage application the bank will need the following documents:

If you are married in joint community of goods (usually the case in the UK) the property and the mortgage have to be registered in the name of both, so all documents of both partners need to be sent to the mortgage bank.  The bank will contact the owner or his agent to obtain information on the property; purchase deeds, cadastral extracts, etc.
 
Our advice to ‘emigrants’ (taking permanent residence here) is to apply for a mortgage on the basis of your actual income, so before quitting your job and leaving your home country. If you apply for a mortgage without a steady income for the future it is virtually impossible to get a mortgage.
 
Easier still, for those keeping a property outside Italy, is to raise the 'extra' as addition to your present mortgage in your home country or against your freehold property which has no mortgage on it. This can be a very quick process (10-15days), much less stressful all round, and you are free to go ahead with your italian house purchase.

 You can always try to include a condition in your proposal to buy a property (“subject to written approval by the mortgage bank”).  We know this is becoming more and more difficult here, and sometimes it almost necessitates a leap of faith, but try and do a little homework, before looking at properties, with the bank and mortgage lenders in your own country.

La Porta Verde limits itself to bringing the bank/broker and the client in contact with each other and accepts no further liability.

Click here if you want more information about mortgages.

Useful Links

MutuiOnline - the largest mortgage broker in Italy, with English-speaking consultants specializing in serving foreign residents.
Baydonhill - your complete financial solution when buying a property in Italy.
 
 Click here for the specialist on Italian real estate mortgages to non-Italians.
 

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