Financing

A typical characteristic of the Italy loving homebuyer is that there is usually no need for financing to purchase the dream home. This is in contrast to foreign homebuyers in countries like Spain, France or the Benelux countries who often do need a mortgage to finance the purchase. It turns out that Italy lovers have often cherished their dream of a house in the land of the boot for years and are willing to put money aside for it. Yet, even now it is more common for buyers to want to (partially) finance the purchase of an Italian second home. It is good to list the possibilities and also impossibilities. This is extra important because the buyer who wants to enter the Italian real estate market needs to be well prepared. We already described that in Italy, a down payment should be made directly to the seller when entering into a purchase agreement. In addition, making a financing reservation is quite unusual in Italy. An Italian seller will often interpret it as a sign of weakness and will assess the offer as less serious.

What options are there (still)?

A commonly used option is that of refinancing one's home in the country of origin. With interest rates still quite low, this is a simple and quick way to free up funds. Home buyers often provide a loan to themselves to make the purchase possible. Advice from a financial adviser is essential then, though. Should this not be possible or desirable, one will have to rely on a mortgage with an Italian bank. However, it should be kept in mind that due to the Italian government's greatly increased requirements under anti-money laundering legislation, many Italian banks have stopped providing mortgages to non-residents. However, if you intend to move to Italy and thus become a resident, you can apply for a mortgage from an Italian bank under equally tightening conditions. There must then remain a demonstrable and stable source of income, and more and more banks are requiring that you have already lived in Italy for at least 2 years, to be proved by at least 2 Italian income tax returns. It is important to note, however, that Italian banks are not interested in financing B&Bs based on a business plan. Financing on the property and an existing source of income (salary) is always the starting point.

What requirements does an Italian bank make?

Like a Dutch or Belgian bank, an Italian bank states that the applicant must have sufficient income to pay the interest plus redemption. To demonstrate this, the applicant must provide the bank with a number of documents, some of which must be translated into Italian. For a more detailed statement of requirements, you can download a leaflet here. The applicant should realise that the Italian mortgage system is very simple compared to that in the Netherlands. There is no such thing as an interest-free mortgage, and you always pay interest as well as repayment. The maximum mortgage amount is usually 50-60% of the purchase price or the appraised value if it should be lower than the purchase value.

Prepare your financial affairs in advance. Know what you can borrow and what part will have to come from your own resources. Only in this way can you enter the Italian property market decisively. A market that is very strong in many areas so you may not be the only interested bidder.