Introduction
Govonilaw assists foreigners in buying a property with a mortgage, following the communications with the bank, and the legal steps of the procedure in Italy.
Foreigners can buy houses in Italy with a mortgage, and it is possible with various Italian banks, but to obtain it some general requirements need to be met.
Let’s try to get more into the details of the procedure of mortgage lending to foreigners to know more about this opportunity.
1) Individual Foreigner Financial Check: The bank will review your finances (such as income, salary, guarantees, properties, etc.) to see your stable economic status;
2) Property Check: Then, they will check the property, obtain information and data about it, figuring out if there are any issues against the possible mortgage;
3) Mortgage Application: You will make a mortgage application following some specific forms;
4) Pre-Approval: If the previous steps went well, you will obtain an informal pre-approval;
5) Surveyor Inspection and Compliance: the bank will send a surveyor appointed for the property inspection and he will do a compliance reporting to the bank any technical issue on the property and its evaluation, in this way, the bank will know how much has to lend to the foreigner in the agreed percentage of the property value;
6) Notary Title Check: a notary will be appointed by the mortgage applicant to review the property title and issue a title check report for the bank;
7) Final Mortgage Approval: Assuming that the foreigner’s solvency, house status, and title have been checked out without any problem, the bank issues a formal mortgage approval;
8) Funds Release: After mortgage approval, the parties agree on a signing date for the notary deed (done on the same day of the deed of property purchase), and finally, the foreigner will receive the funds.
The real market value of the property is usually much higher than the cadastral value, and sometimes both can differ from the bank surveyor.
To complete the mortgage process, the bank might want you to open an Italian bank account with them to set up automatic mortgage payments, but since it isn’t a legal requirement you could agree to use your current Italian bank account if you already have one.
The mortgage obtained will be anyway not for 100%, often the bank will lend up to foreigners 50-60% of the property value.
“A mortgage loan is the typical financing contract within our legal system and almost always one of the parties is a bank.
To obtain a home loan it is sufficient to approach a bank and provide the documentation it requests.
Those applying for a mortgage loan who need clarification can also consult, in addition to the bank, various consumer associations, and their usual notary who can furnish all the advice and information needed for the operation.
It is not necessary, on the other hand, to make use of a credit intermediary (e.g. a credit broker or financial asset manager): if this occurs, the costs of the operation are destined to grow, the broker’s fee sometimes is expressed as a percentage of the amount borrowed. Common sense and prudence are necessary for applying for a home loan or other financing in general.
The use of credit is now common for the purchase of motor vehicles or non-durable, sometimes inessential, goods. Also, the use of electronic means of payment often does not allow one to fully assess a dangerous decline in one’s savings.
One must, therefore, be fully aware that the accumulation of installments that have been inadequately weighed up at the time the commitments were made, could render the periodic payments out of real family income unsustainable, thus in some cases causing serious financial difficulties with unpredictable consequences.
Sometimes it is wiser to give up, limit, or postpone a purchase. Good advice and the exchange of views with an expert can help ensure one’s future serenity. The lawyer, in addition to checking the validity of the contract and accepting responsibility toward the bank as to the ownership and freedom from the encumbrance of the property denominated as security, checks in the contract for the existence of any unfair terms detrimental to the client, prevents fraud that might harm the bank or the client and, by his experience and training, can advise the borrower regarding the best solutions, pointing out provisions that could lead to an imbalance in the contractual terms.
The practice of contacting the notary early on is crucial because the notary has less room for maneuver if problems are raised when contractual deadlines are imminent and when the buyer of the property, to meet his commitments, absolutely must somehow and without delay obtain the release of the funds. It should be remembered also that prior intervention of the notary in contracts of this kind is in effect an opportunity to obtain legal assistance that is routinely included in the total cost of the deed.
A mortgage loan normally accompanies the purchase of real estate (a so-called “fondiario” loan, i.e. secured by real estate, where the amount is not more than 80% of the market value of the mortgaged property), so it very frequently happens that the deed of sale and the mortgage are signed in front of the notary simultaneously. In this case, too, it is useful to contact the notary well in advance, to have all the information necessary for the procedures to be followed with the bank, especially concerning the mode of delivery of the money, which is not always at the time the mortgage deed is signed”.
Since 2019, Italian banks have been unlikely to approve a mortgage for foreign nationals or Italian citizens working abroad. One viable option is to ask for a mortgage or loan from the bank where the foreigner resides and/or works.
