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Mortgages in ItalyA mortgage un mutuo is money lent by a financial institution secured against the borrower's property. If the borrower is unable to meet the payments stipulated in the mortgage contract their property can be repossessed by the lender. Italian mortgages usually last 5, 10, 15, or 20 years, although sometimes as long as 25 or 30 years. Usually the mortage will cover 80% of the value of the property although some banks offer finance up to 100% of that value (sometimes requesting extra guarantees and with stricter conditions).
Rates of InterestThe rate of interest payable depends on the type of mortgage chosen:
Contratto a tasso fisso: Fixed rate of interest payable throughout the life of the loan.
Contratto a tasso variabile: A variable rate of interest is payable which is usually a fixed amount above the base rate of interest.
Contratto misto: A mixture of fixed and variable rates of interest at different times during the life of the loan.
Contratto con tasso d'ingresso: For a fixed period of time at the start of the loan - usually some months - a special low rate of interest is payable after which the usual fixed or variable rate of interest if charged.
Mortgage PaymentsA mortgage contract details the payments to be made throughout the life of that mortage. Most mortgages in Italy use a system known as ammortamento alla francese. Each payment is made up of a mixture of an interest payment and a capital payment. At the start of the mortgage the payments are mostly interest with only a small amount of capital being paid off. At the end of the mortgage the amount of capital paid off per payment if increased while the amount of interest to pay is reduced.
The payments or installments known as La Rata are paid at regular intervals: monthly, every 2 months, every 3 months, or even every 6 months. If the payments are not made on time then extra interest called interessi di mora will be charged and, if it can be proved that at least 7 payments (whether consecutive or now) were late then the lender has the right to repossess and sell the property to pay off the loan. (A payment is not considered late officially until at least 30 days after the payment was supposed to be made.)
Obtaining a Mortgage in Italy - richiesta di mutuoOnce you have agreed il compromesso or promesso di vendita with the vendor, i.e. once you have both legally committed to the sale of the property and you have paid your deposit, you need to find a bank which is willing to supply you with the balance of the value of the property.
You will need to provide the following information when you make your richiesta di mutuo or request for a mortgage:
Your personal details, and those of all others involved in the purchase of the property.
Your residenza document to prove you are resident of Italy.
Details of whether you currently rent your home in Italy, own your home in Italy, or are just living with someone as a guest etc.
The make up of your nuclear family.
Which people work?
What kind of work? Are you an employee dipendente or are you self-employed lavoratore automomo.
Length of time at this work.
The sector in which you work.
Net monthly income.
Net annual income.
Description of the property in question - floor area, number of floors, age etc.
Value of the property.
..and finally a declaration of your existing debts if you have any and how much and to whom they are owed.
On receiving all this information, the bank will decide whether to lend you the money based on the net earnings of you and your nuclear family, the value of the property, and the presence of a guarantor on the loan. In Italy they examine the rata/reddito or the monthly payments to monthly net income ratio. If the monthly payments on a mortgage would be more than 30-35% of your net monthly income, then your application would almost certainly be refused.
If the bank approves in principle to offer you a mortgage, you will then have to provide documentation to back up the informal information you provided the bank earlier with you richiesta di mutuo. The documentation required will be specified by the bank, but is likely to include your birth certificate, marriage certificate, compromesso/Promessa di Vendita, a habitability certificate, divorce certificate (if applicable) etc...
The bank will then process your application fully and confirm the percentage of the value of the property they are willing to lend you.
Signing the PaperworkFinally, all being well, you will go before the notary (notaio) together with representatives of the bank. They will transfer to you the sum of money agreed, and you will sign an agreement to pay the money back to the bank.
You will also sign L'ipoteca. This is the document which details what will happen should you default on you mortgage payments. The amount you will have to pay back the bank in this eventuality is in general between 150% and 300% of the amount of money borrowed. This is to cover interest payments, additional interest payments for each late or missed payment, expenses for notaries, and other professionals, and legal costs.s
Useful LinksLifeInItaly.co.uk has compiled a comprehensive province by province list of 10,000 registered estate agents in Italy. Click here to view this unique Directory of Italian Estate Agents
MutuiOnline - Guide to Mortgages in Italy
Written in Italian this is an excellent site on which to find out information about mortgages in Italy and also to compare the mortgages offered by different Italian banks.