9 Step Italian Mortgage Process
There are 9 steps to the Italian mortgage process.
If you’re an Italian resident or have Italian connections you should already have the first 2 Italian mortgage process steps completed. So, if you already have a Codice Fiscali and an Italian bank account you can skip directly to the Italian mortgage process Step 3.
Step 1 – Codice Fiscali
In Italy the Codice Fiscali is the government’s universal identification code for its citizens and residents, so everybody needs one.
The Codice Fiscali is issued by the Agenzia delle Entrate (tax office) and you can find the address of your local office here. You will normally be asked to produce your passport and residence permit (Permesso di Soggiorno), but your estate agent can give you a letter confirming your intention to purchase a property which will be accepted in lieu of the residence permit.
You can get a very reliable estimate of what your Codice Fiscali will be from this website where you will need to enter the following information:
- Cognome = Last Name
- Nome = First and Middle Names
- Sesso = Gender
- Comune di Nascita = Town of Birth (if you are a foreigner, insert country of birth: USA=Stati Uniti; UK=Regno Unito; etc…)
- Provincia = Province (use this only if you have entered an Italian town in the Comune di Nascita field)
- Data Nascita = Birth Date (Day-Month-Year)
Step 2 – Bank Account
Once you have obtained your Codice Fiscali you can then open an Italian bank account. If you will be visiting Italy you can do this in person at a bank of your choice, but your estate agent should be able to help you if necessary.
Step 3 – Check Your Mortgageability
Checking your mortgageability is the first real step on the Italian mortgage process: Steps 1 and 2 are only precursors to the Italian mortgage process.
It is not easy to get an Italian mortgage, particularly if you need to obtain a high LTV (Loan to Value) ratio Italian mortgage.
To avoid disappointment, it is best to begin the Italian mortgage process before you start house hunting. By first establishing if you will be able to get an Italian mortgage and on what terms an Italian mortgage might be offered will guide your choice of property and give your estate agent a good starting point to help you from.
If you have already found the property you want to buy and are asked to sign a compremesso by the estate agent it is important to make sure that the compremesso includes a clause that allows you to withdraw from the purchase if you are unable to obtain an Italian mortgage.
Step 4 – Check Your Affordability
When you start looking at properties it’s very easy to always want the house that’s just a little more than you can afford: It’s the same with your Italian mortgage.
To succeed with the Italian mortgage process you must take the time to do some serious budgeting. Make sure that the monthly Italian mortgage repayments will be affordable.
An Italian bank won’t accept you as a mortgage client if your regular commitments, including the proposed Italian mortgage, exceed 35% of your net income.
Step 5 – Check Your Mortgage Type
In Italy both fixed and variable rate mortgages are available.
Evaluate both in terms of what will be best for you, both now and in the long term: remember an Italian mortgage can last for up to 30 years.
Step 6 – Check Your Mortgage Costs
In Italy interest rates can be shown as TAN or TAEG.
TAEG is the most helpful rate to use to compare mortgages because it is calculated as the effective rate, including all charges, whereas TAN is simply the declared interest rate.
You will find a useful calculator on this site that will enable you to convert TAN to TAEG and TAEG to TAN so you are comparing like with like.
Step 7 – Check Your Mortgage Alternatives
All markets, even the Italian mortgage market, have a range of products on offer and some are better value for you than others.
Make sure you look at the alternatives open to you or ask a reputable Italian mortgage broker to help.
Step 8 – Check Your Mortgage Processing Time
In Italy it takes far less time to become legally committed to a property purchase contract than to obtain a mortgage.
When you are planning your property purchase remember to build in a delay of between 40 to 50 days, if not longer, to allow the bank to process your mortgage application.
Step 9 – Check The Small Print
This final stage is the goal of the Italian mortgage process and brings the Italian mortgage process to a successful conclusion.
After around 50 days form completing a successful bank application you will get an Italian mortgage offer from the bank.
You must sign and return, if you accept it, after the due legally required period for consideration.
By this point most Italian mortgage applicants are so relieved to have an Italian mortgage offer in their hands that they sign and return it without hesitation.
We recommend that you, in your own best interests, take the time to read and fully understand all the details and conditions of the Italian mortgage your are being offered because this is probably your last chance to make any changes to the mortgages until you redeem it.
The Italian Mortgage Process In Italiano
Here’s the Italian mortgage process in Italiano so you can practice your Italian.
There are only 7 steps in the Italian version of the Italian mortgage process covered in the video because it was prepared for Italians who will already have a Codice Fiscali and an Italian bank account.