It is very rare for Italian mortgage providers to offer mortgages of more than 80 percent of the property value. In fact, the average is normally around 60 percent of the market value.
Practical Issues with Italian Mortgages
Essential Practical Information for Italian Mortgages
When purchasing a property in Italy and obtaining a suitable mortgage for the purchase, there are several additional hints and tips that are locally applicable and should be taken into consideration.
Power of Attorney
As with any foreign purchase, it may not be practical to be present for every contract that needs to be signed. When purchasing an Italian property, all contracts must be signed in front of a public notary; therefore, alternative arrangements must be made if you are unable to attend the signing.
This is particularly important in Italy, as there are often three different contracts that have to be signed at different times, involving a great deal of travelling if you are not resident in Italy. One way of dealing with this is to appoint another person and give them power of attorney (or procura as it is referred to in Italy).
Anyone with a power of attorney for you can then sign on your behalf. This power of attorney can be arranged during your first visit and can make the purchasing process a lot smoother.
Obtaining an International Mortgage
Bearing in mind that the Italian mortgage market is not as well developed as in other countries such as the UK, sometimes there are fewer mortgage products available and this may result in the need to obtain a mortgage outside Italy.
The most obvious choice is to obtain a mortgage in the UK that can be used to purchase an Italian property. Be aware, however, that not all international banks are prepared to lend against an Italian property. One of the main reasons is that the currency fluctuations can be difficult to predict and control.
If a property is purchased in euros but the mortgage is obtained in British pounds, then the real value of the property can be affected by currency exchange rate fluctuations, resulting in a drop in the value of the property and a potentially risky situation for the lender. In order to deal with this risk, the bank may levy a much higher interest rate on these types of mortgages.
In any event, an international mortgage provider will want to see that you are comfortably able to make the repayments and that you have a local lawyer ensuring that title is passed correctly.
If you are not able to be present in Italy to sign every necessary contract then consider putting a power of attorney in place, allowing a third party to sign on your behalf;
international mortgages may seem like a good option for those who cannot obtain the mortgage that they want in Italy; and
bear in mind that by obtaining an international mortgage, there may be currency fluctuations and higher interest rates to reflect the greater perceived risk to the lender.