Italian Mortgages

Differences with Italian Mortgages

Key Differences with Italian Mortgages
Whilst the basic mortgage requirements and procedures are very similar in Italy to the UK, there are still some anomalies that come to light when further information is sought on Italian mortgages.

Stage Payments
It is worth bearing in mind that stage payments are very common in Italy; or at least far more common than in the UK, as many foreign purchases in Italy are properties that require substantial renovations. Unlike in the UK where lenders will allow a borrower to borrow based on the current market value, possibly holding some money back until certain works are completed, Italian lenders will commonly set out stage payments.

There is a mortgage deed in Italy and, as part of this deed, stage payments may be laid out. These stages can be agreed between the lender and the borrower based on certain landmarks stipulated as part of the renovations. Consider this aspect of the mortgage process, particularly if you are purchasing a renovation project.

Bureaucracy
It is common knowledge that Italy has a large amount of red tape and anyone buying property with an Italian mortgage should be under no illusion that the paperwork will be substantial!

Unlike in the UK, there are actually three stages to purchasing a property in Italy, which can protract the process considerably. However, the upside of this increased bureaucracy is that the protection is seen to be greater. This is clearly evident as gazumping is not actually possible during the Italian purchasing procedure.

Proving Income
It is not possible to have a self-certificated mortgage in Italy. This means that any mortgage applied for must be supported by proof of income. If this is for an employed individual, then it is advisable to have at least 3 months¡¦ payslips as well as personal bank account statements, ideally dating back for 6 months.

If you are purchasing as a company, it is important that information such as audited accounts, business bank statements and personal bank statements are given to an Italian mortgage provider as proof of income.

Potential rental income is not taken into account by Italian mortgage lenders. Therefore, it is vitally important that income records are in order and prove sufficient financial standing to gain the required mortgage.

Summary
Stage payments are common practice in Italy, particularly when embarking on a renovation project;
generally, there is a lot more bureaucracy in Italy which will lengthen the purchase time substantially, but can offer greater security to purchasers;
self-certification is not an option with Italian mortgages; therefore, accurate records of income are required; and
rental income is not taken into account when calculating the amount that can be borrowed.