Overseas mortgage for property abroad: borrowing to buy a house in Italy

dl_a01040827.jpg
Get an overseas mortgage on Italian property / Gtres
12 December 2018,

Buying a home abroad can be a way to secure a second home in an exclusive location or to diversify your investment portfolio. It can also be done by applying for a mortgage abroad: let's see how.

Why buy a house abroad?

According to Mutui.it, the sale and purchase of residential properties overseas is increasing all the time. The growth of this type of foreign investment has led to the multiplication of opportunities in tourist sites and the need for an alternative investment at a time of low financial returns on properties at home, or simply from those who want to get a bargain on a place to spend the holidays.

Watch out for home purchase laws abroad

To buy a house abroad, first of all, you need to evaluate the rule and regulations on the purchase of houses as they vary from state to state: in some cases there are limitations, in others the purchase of residences by expats is even encouraged. You also have to deal with the different bureaucracies in different regions. More than all this, though, the main problem will be to find a bank that finances the purchase of housing overseas.

Within the European Union, this should not create problems (in the name of the principle of free movement of capital), but if you were to look for a mortgage at home to finance the purchase of a house in Italy, you may run into difficulties. This is not so much due to the procedures of financing, which in itself would not be different from those for the purchase of a house within national borders, but because the bank may not like issuing a loan on a property located where it would be difficult to recover and manage funds in the event of non-payment by the borrower.

Home abroad, better a liquidity mortgage

If your chosen bank is not an Italian bank in the end, though, Mutui.it suggests that better than a mortgage loan would be to get a liquidity loan. This is a loan that can be disbursed only under certain conditions, including that of owning a property free of constraints and therefore possibly mortgageable as collateral for the loan.

For the rest, however, the financing would not be finalised, and therefore would be allocated to the most convenient use (including the purchase of a home abroad). The downside of this solution is that interest rates will tend to be higher and the percentage financed could fall to 50% of the value of the property (whereas with a traditional mortgage it can reach up to 80%).

Fees and costs of foreign mortgages

If, on the other hand, you choose to go directly to a bank located in the Italy, the operation will be just one more of the usual operations of the local bank, so the only caution on the part of the buyer will be to inquire about the procedures on site. In particular, you should keep an eye on the costs of the professionals involved in the sale, the procedures for making payments, and the rates applied.

From the original Italian language article: Mutuando - Case all’estero: come richiedere il mutuo (Mutui.it)

Ready to find the house of your dreams?

Ready to find the house of your dreams?

Find houses for sale and long term rentals on idealista