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PROPERTY

How can a non-EU citizen get a mortgage to buy property in Italy?

If you're thinking of buying a house in Italy and need a mortgage, as a non-EU national there are a few things you'll need to know before you start the process.

A vespa outside an Italian house.
The process of getting a mortgage in Italy differs depending on whether you live here or not. Photo by Daryna Filon on Unsplash

Question: I live in a non-EU country and plan to buy a home in Italy in future. Can I get an Italian mortgage if I don’t live in Italy yet?

Many readers have contacted The Local to ask how they can get a mortgage in Italy, whether that be for a second home, their new primary place of residence or a nest egg for them to enjoy in retirement.

The answer can be complex and depends on whether you’re already a resident in Italy or not, where you’re from and where you’re currently living.

With some expert advice however it is possible to navigate the system and set up your very own ‘casa dolce casa‘.

READ ALSO: Why now is the ‘best’ time to buy property in Italy

Here’s the essential information you need to know and the biggest mistakes to avoid.

Note: The processes are complex, so it’s important to get professional advice before buying.

A yellow Italian house
Photo by Tim Alex on Unsplash

If you’re not a resident in Italy

If you don’t (yet) live in Italy, the good news is you can legally get a mortgage to buy an Italian property.

If you thought it would be easier to apply after moving to Italy, not so fast.

“The biggest mistake people make is to move to Italy, get residency and then apply for a mortgage,” international financial advisor Daniel Shillito of D&G Property Advice told us.

“It seems counter-intuitive. Surely it would be easier if you were living in Italy to get an Italian mortgage? It isn’t, don’t give up your job,” he advised.

in Shillito’s experience, many people have ended up in this situation and then are unable to get a property loan once they’re living in Italy.

The reason it’s tougher is because Italian banks have no idea whether your job in Italy is stable, which can take around two years for them to deem whether it is or not, he told us.

READ ALSO: The real cost of buying a house in Italy as a foreigner

And once you’ve got residency, Italian banks will generally ask for 2-5 years’ proof of living in Italy before approving a mortgage, as those who have stayed longer amounts of time are generally more likely to stay.

If you’re a digital nomad who has moved your job with you, that’s unlikely to get far in the Italian banking system either: “Italian banks are not fast and nimble enough to determine whether your remote work is steady, so you can’t assume anything, there’s too much risk,” Shillito said.

That means, therefore, that the best route is to apply for a mortgage in the country you are living and working in now.

READ ALSO: What’s the difference between Italian residency and citizenship?

How a non-EU citizen can apply for a mortgage

For those living and working in the UK, US, Canada or Australia for example, the first thing you’ll need to be prepared for is the amount of deposit you’ll need.

The maximum any Italian bank is likely to lend you is 60% of the property price if you’re not in Italy,” Shillito said.

There is also a minimum amount of mortgage they are willing to give you, starting at around €60,000 – €70,000, which works out at around a property price of about €115,000 upwards.

“People looking to buy in Italy sometimes say they’ve saved maybe £20,000 and that should be enough to get a mortgage for a cheap Italian property by the beach of say €40,000.

“It’s not, and it doesn’t work like that,” Shillito said.

Again, these percentages apply in the currency of income, so it would be 60% of the house price in sterling or dollars, depending on where you live and earn a wage.

So once you’ve got the right amount of deposit saved up and have found a property that banks are willing to lend you money for, can you compare the market and go to any bank?

An Italian country house
Photo: Valentina Locatelli on Unsplash

“You can’t walk into any bank you like and ask for a mortgage. It’s a hidden market – banks don’t want to advertise they’ve got mortgages for the world,” Shillito said.

“There are certain banks that have a certain branch where a certain person may help,” he added.

So how do you find them if they’re so concealed? Shillito’s advice is to work with a mortgage broker who knows the local market and can guide you through it.

Yes, it’s an extra cost, but it’s vastly more difficult to get the response you need without one, according to the property expert.

READ ALSO: Searching for cheap Italian property online? Here’s what you need to watch out for

“A mortgage broker will handle all the bank’s administration, know how to deal with the fifth request for paperwork, they’ll ring up the bank when the house is supposed to go through and doesn’t – a broker gets this sorted for you. They’ll tell you when to go into the bank and what to sign,” Shillito told us.

But he warned that there’s more to the process.

“When you buy in Italy and you’re a foreigner, you need to know so much more than, ‘Can I get a mortgage?’ You need to consider when you get a building inspection, when you need a notary, how to go through the three contracts that make up the purchase process. All this can take six to nine months,” he added.

Consultancy firms and lawyers can help fill in the gaps to ensure paperwork is up to scratch before signing any contracts.

EU citizens without residency in Italy

If you’re an EU citizen not living in Italy, the process is much more streamlined than for non-EU citizens.

The European Union introduced the Mortgage Credit Directive in 2014, which aims to integrate the European market for mortgage credit and protect consumers across the EU.

It means the bloc is working towards creating an EU-wide mortgage market with a high level of buyer protection, applying to “all loans made to consumers for the purpose of buying residential property”.

Not all countries in the EU have the same currency, which has previously disadvantaged some of the poorer Eastern nations in the European market.

If a consumer from the Czech Republic got a mortgage in Italy, for example, the Czech crown was weaker than the euro and so monthly mortgage repayments ended up rising due to the conversion.

As a result, Italian banks can’t lend money in a currency that’s different from the income currency.

This is true also outside the EU, so if you’re in the UK or the US, you’ll be applying for a mortgage in either sterling or dollars for instance, not euros.

What if I already have residency in Italy?

As noted above, you may need to show you’ve been living in Italy for 2-5 years in order to obtain a mortgage. They’ll also take into account your salary and how stable that wage is.

They could also ask for information of family or investments in business, as that shows a commitment to staying in Italy and repaying the mortgage, which can last from 5 to 30 years.

However, shorter mortgages are more common in Italy than in the UK, for example, which is important to remember as it may mean higher monthly repayments.

They may also ask for the following:

  • ID card or copies of your valid passports
  • The initial sale agreement
  • Income proof (consisting of your last three payslips, your last 2/3 tax certificates and a contract of employment)
  • Credit report
  • Proof of address (copy of recent utility bill)

Even if you’re already living in Italy then, it’s not a simple or fast process

What about non-EU citizens living in Europe?

If you’re an American living in Germany, for example, this is where “you can get into real problems”, Shillito told us. There isn’t a one-fits-all solution in this case and you’d have to seek professional advice based on your individual circumstances.

Daniel Shillito manages a finance company specialising in Italian mortgages and purchase processes. For further information, you can contact him by email here.

See more in The Local’s Italian property section.

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For members

MONEY

How to get a discount on the cost of solar panels for your Italian property

Solar panels are an understandably popular choice in Italy, and if you're thinking of installing them on your own home there's funding available to help lower the cost. Here's what you need to know.

How to get a discount on the cost of solar panels for your Italian property

As utility bills rise, more home and business owners in Italy are looking at installing solar panels as a possible way to reduce costs in the long term.

Solar panels are already hugely popular in Italy, with the nation ranking top worldwide for solar-powered electricity consumption.

READ ALSO: Who can claim a discount on energy bills in Italy?

And no wonder: it’s a solid bet in a country where there is sunshine in abundance. But what about the costs of installation?

The good news is that there’s financial help available from Italy’s national government aimed at encouraging uptake of solar energy, as well as other incentives from regional authorities in many parts of the country.

It’s in the government’s interest to incentivise solar power, as Italy has vowed to transition to greener energy with its National Integrated Plan for Energy and Climate (Piano Nazionale Integrato per l’Energia e il Clima 2030 or PNIEC).

So how could this benefit you? Here’s a look at what you can claim at both a national and a regional level.

Regional funding for installing solar panels

As well as the national government subsidies available for covering the cost of solar panel installation, some regions have introduced their own bonuses or discount schemes.

The sunny southern region of Puglia and the wealthy northern region of Lombardy have seen the highest number of residential photovoltaic systems installed, according to market research.

it’s not surprising, then, that these two regions’ governments are offering cash incentives to help cover the cost of installing solar panels.

Depending on the type of system you opt for, you could expect to pay between around €5,000 and €13,000 for installation, design, labour and paperwork.

To contribute to this initial outlay, the local authority in Puglia has created a pot to help homeowners on lower incomes move towards renewable energy.

READ ALSO: What you need to know about installing solar panels on your home in Italy

Newly introduced in 2022, the so-called Reddito energetico (energy income) offers households with an annual income below €20,000 a bonus of up to €8,500 for installing photovoltaic, solar thermal or micro-wind systems in their homes.

The bonus is intended for residents who have citizenship of an EU country or, if you are a citizen of a non-EU country, you can still claim the bonus if you have been resident for at least one year in a municipality in Puglia.

The €20,000 annual income refers to a household’s ISEE – an indicator of household wealth calculated based on earnings and other factors.

A worker fixes solar panels. (Photo by Ina FASSBENDER / AFP)

For this particular scheme, if you claim this bonus from the authorities in Puglia, it precludes you from also claiming funds at national level concurrently – such as through the popular superbonus 110 home renovation fund (see below for more on this).

Although there are other government bonuses, such as the renovation bonus (bonus ristrutturazione) that offers a much higher maximum total expenditure of €96,000, it can only be claimed as a 50 percent tax deduction spread over 10 years in your tax return.

For lower income families in Puglia, this may not be as cost effective as the grant from the regional authorities, which may equate to more money towards the cost and supply of solar panels.

For more information and to apply for Puglia’s renewable energy bonus, see here.

Lombardy is also stumping up funds to continue the solar power momentum experienced in the region.

While the coffers for private properties are currently closed, the region has made funds available for those with small and medium-sized businesses – again, in a move designed to lessen the impact of rising energy costs.

Business owners can claim a 30 percent grant for the installation of solar panels. There are more funds available to cover the cost of consultancy during the process too.

For more details on applying for this energy bonus in Lombardy, see here.

Other regions have also taken the initiative with encouraging more homes and businesses to change to solar-powered energy.

The region of Tuscany is offering an incentive on installing solar panels to residents in the form of tax deductions spread out over several years.

Works permitted include installing winter and summer air conditioning and hot water systems using renewable sources. This covers heat pumps, solar panels or high-efficiency biomass boilers.

For further details and information on how to apply, see here.

Each region may have its own solar panel bonus, either in the form of grants or tax deductions, available to private residents and/or businesses.

Check your regional government’s website to find out what may be currently on offer.

Solar panels are an increasingly popular option for those renovating homes in Italy. Photo by Jeremy Bezanger on Unsplash

National subsidies for installing solar panels

If your region isn’t offering any cash incentive to install solar panels on your property, there are government funds available, which cover all 20 regions.

The authorities introduced and extended a package of building bonuses in order to galvanise the construction industry following the economic downturn caused by the pandemic.

While there is no single, separate package of incentives for installing solar panels in 2022, you can take advantage of other government bonuses that include the cost of solar panel installation and supply.

As noted, you could use the renovation bonus (bonus ristrutturazione), which amounts to a 50 percent tax deduction spread over 10 years in your tax return – or through the superbonus 110, a scheme that promises homeowners a tax deduction of up to 110% on expenses related to property renovation and making energy efficiency measures.

READ ALSO:

The property must make at least a double jump in energy class or reach the highest efficiency rating when accessing these bonuses.

There’s a substantial amount of funds on offer to install your solar panels.

Using the renovation bonus, there is a maximum total expenditure of €96,000 (per single housing, including condominiums). Remember this amounts to a 50 percent tax deduction, so the maximum saving you would make is €48,000.

The renovation bonus has been extended until 2024 and, where solar panel installation is concerned, you can claim for the costs of labour, design, surveys and inspections, as well as VAT and stamp duty.

You must tell Italy’s energy and technology authority, ENEA, that you’ve done the works within 90 days in order to access the state aid for solar panel installation.

If you choose to use the superbonus route to claim funds for your solar panels, however, you can spread out the tax deduction costs over five years. Alternatively, you can apply for it as a discount on the invoice (sconto in fattura) or through the transfer of credit (cessione del credito).

The limit when using this bonus is €48,000, which can now be accessed for a while longer as the government extended the deadline for single family homes.

See HERE for details on how to claim it.

See more in The Local’s Italian property section.

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