Buying Guide

With many years of experience Somerset Mortgages provides an independent and comprehensive service to help you buy or re mortgage your property in Italy. We work with the national Italian banks, the UK banks that operate in Italy and a number of European investment banks. Working with so many banks allows us to offer you the best deal, whatever your circumstances.

We have a close working relationship with the banks in Italy and due to the volume of business that we introduce, we are regularly able to offer lower interest rates and fees than you would normally be offered.

A step by step guide to buying a house in Italy with an Italian Mortgage

1. Identify a property.

2. Find out how much you are eligible to borrow by completing our online quotation request form.

3. While in Italy sign a sales agreement (Compromesso) & transfer the deposit with Somerset FX to secure the property.

4. Instruct Somerset Mortgages to apply for a mortgage on your behalf.

5. Lender issues a draft mortgage offer subject to valuation & Notaio's report (confirming property is free from debt).

6. Lender instructs valuation.

7. Open an Italian bank account and provide details of fiscal number (Codice fiscale) to the lender.

8. Arrange monthly mortgage payments with Somerset FX Regular Payment Plan.

9. Completion.

10. Notaio registers the mortgage deed (this takes between 2-5 days). Once registered, the Notaio releases the mortgage funds to the beneficiary.

What type of property can I get a mortgage on?

We can arrange mortgages for individuals or companies to buy main homes; second homes; rental or investment properties; off-plan properties and commercial properties. Equity release mortgages are available.

What currency will my mortgage be?

All Italian banks will provide mortgages in Euros, but we can also arrange mortgages in other currencies such as US Dollars, Sterling and Swiss Francs.

What is the maximum loan amount (LTV%)?

Depending on the valuation of the property or purchase price, non-residents can borrow up to 80% for purchases and equity release. All mortgages are subject to income, but some banks will also take rental income into consideration.

Lending Criteria

Lenders calculate financial commitments (loans and rent) including the requested mortgage, as a percentage of stable pre-tax income. As a general rule the ratio should not exceed one third, but obviously this depends on the figures involved as the higher the income the higher the debt ratio can be. In fact, most lenders try to apply their rules with common sense and look at the actual amount of disposable income, not just the percentage.

What is the minimum loan amount?

The minimum loan amount that Somerset Mortgages will consider is €100,000.

How long is the term of the mortgage?

The mortgage term can be from 5 - 30 years.

Do I need life assurance?

Yes, life assurance is mandatory. Somerset Mortgages can help you arrange this at minimal cost.

Which mortgage types are available?

Both capital repayment and interest only mortgages are available for both purchase and equity release.

Interest rates

The interest rate will depend on the currency of the mortgage. For example, if a Euro mortgage was selected then the EURIBOR (European Interest Offered Rate) would apply, plus the bank's margin.

Buildings insurance

The lender will insist that you take cover with their chosen provider. However, this only meets their basic requirements. For more comprehensive cover, further insurance will need to be taken out. Somerset Mortgages can provide you with a quote for this.

Bank account

You will be required to open an Italian bank account before completion. Somerset Mortgages can assist you with this at no additional cost, if required.

What timeframe is involved in securing the mortgage?

An Agreement in Principle can be obtained from a lender once all the requested documentation has been submitted. This takes approximately three working days. However, for loan amounts in excess of €750,000 this may take longer.

A minimum of six weeks should be allowed from application to completion.

Organising payment of your Italian mortgage

Please be aware that missing a monthly mortgage payment may have serious consequences and we therefore strongly advise participation in the Somerset FX Regular Payment Plan. This service gives you peace of mind in the knowledge that your Italian mortgage repayments will be met automatically each month.

Completion

Mortgage funds will be released by the lender to your Notaio for completion of the purchase.

Fees and Taxes

• Somerset Mortgages charges a non refundable administration fee of £150 to prepare, package, facilitate and courier your mortgage application.
• Somerset FX does not charge a fee or commission.
• The Notaio will provide you with a breakdown of fees payable once a sales agreement has been signed. The Notaio's fee will include Stamp or Transfer Duty and the Mortgage Registration Fee.
• The Bank's Arrangement Fee will generally be 1%. Where possible we will negotiate on your behalf to reduce this.
• The estate agent commission will vary from 5% - 7%.
• Mortgage Registration Fee varies from 1% - 1.5% of the loan amount to register the lenders charge against the property.
• Stamp or Transfer Duty - varies between 1% - 2%.
• Mortgage Registration Tax is 0.25% for residents and 2% for non-residents, or second homes.
• The banks Buildings Insurance is a one-off fee, payable to provide basic cover for the duration of the mortgage. Somerset Mortgages recommends that you take out additional cover, as the banks insurance only offers minimum protection.