If you're planning to buy a property in Italy, then you will likely need a mortgage. As a foreigner in Italy, this is something that varies depending on whether you're a resident in Italy or not, and in the case of mortgages in Italy for non-residents, the process generally requires more documents. Today we're focusing on how residents can get a mortgage in Italy, a process which is the same as Italians who need a mortgage. What do I have to do to apply for a mortgage? Let's have a closer look at getting a mortgage in Italy as a foreigner with the help of Telemutuo.
How to apply for a mortgage in Italy
For the majority of banks in Italy, applying for a mortgage takes place in 3 stages:
- Client and credit history study: you will have to provide the bank with a list of documents, including your ID card or passport, the property sale agreement, proof of income (normally your last 3 payslips and tax certificates), a credit report and proof of your current address. Your credit history will be checked, as well as your personal and income situation in order to evaluate the viability of your mortgage application.
- Property valuation by an independent company: this company is chosen by the bank and estimates the value of the house in order to certify its mortgageability as a guarantee for the loan.
- Completing the mortgage application process: if the valuation meets the criteria set by the bank and the bank is happy that your application is low risk, then you will be able to proceed with the purchase and sign the mortgage.
It's important to note that this is a rather complex process that takes on average between 20 and 60 days. In some cases makes it impossible for the potential buyer to sign an agreement, and in many cases the house of their dreams will be lost due to the lack of immediate financial resources to complete the process.
This is why some banks allow clients to apply for a mortgage with pre-approval, without costs and constraints for the customer, lasting up to six months to allow the potential buyer to arrive with the cheque in hand when visiting the property to buy.
How much money can you ask for?
But how much money can an Italian bank give you for your mortgage? Let's look at various cases through a simulation carried out by the Telemutuo Study Centre.
Situation 1: a household with average income
Assuming a 3-person household, with 2 average incomes and a total net monthly income of 2,800 euro (with no outstanding commitments such as other loans), most banks will be willing to grant a mortgage with an instalment of no more than 840 euros per month. This amount corresponds to about one third of the net disposable income considering a residual income of 1,960 euros, sufficient to cover the household's current expenses. In this case, the amount obtainable for a pre-approval will be about 180,000 euros to be repaid in 20 years.
Situation 2: a high income household
In the case of a family with a high average income (4,800 euros net per month) with no outstanding commitments, the maximum obtainable monthly instalment can be close to 1,500 euros. Considering a maximum instalment of around 30% of the available income, it is possible to imagine to get a pre-approved mortgage of around 310,000 euros to be repaid in 25 years.
Situation 3: a single person with low income
On the other hand, for a single person looking for a house, be it a first or second home, with an average income that would allow him to live in a large city (net monthly salary of 1,600 euro), we can assume a maximum mortgage payment of 480 euros which would allow him to take out a mortgage loan worth around 125,000 euro to be repaid in 25 years.
Situation 4: a single person with high income
For a single person with a medium-to-high income of around 2,800 euros per month, a maximum instalment of 850 euros can be assumed (in the absence of other commitments). In this case, the mortgage that can be taken out will be around 220,000 euro to be repaid over 25 years.