Sun, sea and aperol spritz – who wouldn’t want to own a property in Italy? Whether it’s as your main residence, an investment or a holiday home, buying a house in Italy is an attractive proposition for many UK residents, but how do you finance the dream?
In this article we’ll look at getting a mortgage in Italy, the rules and criteria specific to the Italian mortgage market, how much you could borrow and how using a specialist broker can help you get the best deal.
Can UK residents get a mortgage in Italy?
Yes, you don’t need to be an Italian resident or have citizenship to get a mortgage and purchase property. UK residents applying for an Italian mortgage will of course have to meet the lender’s usual eligibility and affordability requirements, but living in the UK isn’t in itself a deal breaker.
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Rules, lending criteria and deposit requirements
Italian banks have historically been conservative lenders when it comes to mortgages, so expect there to be strict criteria to meet before you’re granted a loan, especially as a non-resident.
One example of this is the deposit requirement. Mortgages for Italian residents tend to have a maximum loan to value of 60% and for non-residents this can be even lower, so you should be prepared to be asked for a deposit of 40-50%. If you’re worried about how you’re going to find the cash for your deposit, your broker can work with you to explore ways to fund this, for example by releasing equity in an existing property.
How much can you borrow?
Italian mortgage providers tend to use a debt to income ratio (DTI) calculation, rather than the annual income multiple used by UK lenders, when assessing how much you can borrow. Your DTI is the sum of all of your monthly commitments, including any existing rent or mortgage payments and the repayments on your proposed new mortgage, as a percentage of your net monthly income.
For example, if your monthly income after tax was £4,000, your new mortgage repayments were going to be £600 a month and you had an existing mortgage and loan repayments totalling £400, then your DTI ratio would be 25%. The exact DTI ratio deemed acceptable will vary between lenders, but it’s roughly 35% on average.
Your broker will be able to provide more bespoke estimates of what you’ll be able to borrow, but for an initial illustration why not use our calculator below? Simply enter a few basic details and we’ll give you an idea of what your mortgage repayments might look like. Once the repayment is calculated you can check this versus your monthly income to see if your outgoings are below the required ratio.
Mortgage Repayment Calculator
Our mortgage repayment calculator can tell you how much your mortgage will cost you each month and overall. Enter the amount you’re borrowing, the term length and interest rate, and our calculator will do the rest.
Total amount paid at end of term:
Get started with an expert broker to find out how much they could help you save on your mortgage repayments.
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How to get a mortgage in Italy
Just like in the UK, your mortgage application will involve credit checks and you’ll need to provide ID and other documents including evidence of your income. Gathering this paperwork in advance and reviewing your credit reports will be useful, but there are a few other things specific to getting a mortgage in Italy which are important to consider.
Get your Codice Fiscale
The Codice Fiscale is the Italian tax code and you have to have one to carry out any financial transactions in Italy, including buying a house or opening a bank account. Italian tax codes can be issued to UK residents and it’s a free service, you’ll just need to complete an online form and show a copy of valid ID and proof of your address.
Find a specialist broker
You don’t have to go with a broker who is Italian or based in Italy, but it’s vital that you find a broker who has experience of the Italian mortgage market and who has contacts with local lenders and solicitors. They will be an invaluable part of the mortgage application process for you, handling all of the mortgage research, guiding you through each stage and liaising and negotiating with lenders on your behalf.
If you’re worried about finding a broker with experience in Italian mortgages, get in touch today and we can find the right person for you, based on your personal circumstances.
Be realistic about your timescales
Italian mortgages aren’t known for being speedy, so it’s normally a good idea to begin the mortgage process as soon as you can rather than leaving it until you’ve found a property you want to buy. As well as all of the personal checks on you, a surveyor will be appointed by the bank to carry out a property compliance check and a solicitor will need to review the property title and issue a title check report for the bank. Your broker can give you an idea of realistic timescales and help you plan accordingly.
Which lenders offer Italian mortgages?
Because of their typically cautious attitude to lending, not all Italian banks will consider mortgage applications from UK residents, so it’s important that you work with a broker who has specialist knowledge of the Italian mortgage market and can identify the right lenders for you.
As well as Italian banks, international banks such as HSBC offer mortgage services for UK residents wanting to buy a property abroad. Your broker will research all of the options on your behalf and filter out the best deals.
What are the typical interest rates?
Mortgage rates in Italy will be dictated by the European Central Bank base rate.
It’s very difficult of course to give precise estimates of the interest rates you can expect to pay on an Italian mortgage as a foreigner, as this will vary significantly depending on your circumstances, your deposit and the lender. The best way to get an accurate idea of rates is via a broker.
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Can you get a buy-to-let mortgage in Italy?
Italian mortgages are a little different to the UK in that there are no restrictions on how you use your property once you’ve bought it. This means that whether you plan to live in the home full-time, keep it as a holiday home or rent it out as an investment, one mortgage fits all – there is no such thing as an Italian buy-to-let mortgage.
This makes the process simpler in many ways, and gives you the added flexibility of being able to change how you use the property at any time, without having to change your mortgage. You should still check with your solicitor however if you plan to rent out your Italian home, as there may be local permissions or licences required.
Speak to a broker who specialises in Italian mortgages
You should now be feeling a little more confident about the idea of getting a mortgage in Italy, and if you’re ready to take the first explorative steps then it’s time to get in touch and let us match you with a relevant specialist broker.
Give us a call now on 0808 189 2301 or make an online enquiry now. We’ll ask you some simple questions about your current situation and your goals, and use your answers to pick the advisor that we know will have the best match of experience and skills to make your Italian property dreams come true.