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Airbnb Arbitrage in Italy

Are you planning to buy a property in Italy and is the “non-resident” tag bothering you? Relax, to buy a property in Italy, you do not necessarily need to be a citizen of this nation. Whether you are willing to buy a property for your personal use or to invest in real estate, this article would help thousands of people like you who are tensed regarding the complexities behind the Italian mortgage and housing tax system for foreigners. By the end of this article, you will have a proper understanding of the process of getting a mortgage which is mandatory for a non-resident to buy a property in Italy. So, let’s begin! 


Your non-residence status would not be a problem to purchase real estate in Italy. Italian laws are quite flexible that allow mortgages in Italy for non-residents as well. Although since the financial crisis in 2008, the Italian government has made a couple of strict policies to deal with mortgage applications from non-residents. However, this is nothing unique about Italian law, every country tends to be strict while lending money to foreigners. Usually, Italian banks offer two types of mortgages for purchasing real estate. From a comparative perspective, we will discuss which type is the most suitable for you and why. 


Types of mortgages offered by Italian Banks

Italian banks offer two types of housing loans or mortgages- fixed rate of interest and variable rate of interest. Common sense says anyone would go for a fixed rate of interest, but that would not be a very wise choice. Almost two-thirds of buyers opt for variable rates since the fixed rates tend to be higher than the variable ones. 


Before you apply for a mortgage, it is noteworthy that to buy property in Italy, you are supposed to apply in the Italian banks only. Although, not all Italian banks offer a mortgage to foreigners and hence, the best way is to do some research and consult an expert who could guide you to choose a reliable bank and the most suitable interest rate for you. 


To get mortgages in Italy for non residents, the ask for the loan must be a minimum of 100000 euros. Italian banks usually lend mortgages for 5 to 30 years of the period. Furthermore it is necessary to keep in mind that your application might be terminated if you ask for the total cost of the property as a loan. Neither the citizens nor the non-residents have credited a loan that covers 100% cost of the property. You can ask for a maximum of 70-80% of the total property cost as a mortgage. If you are a non-resident in Italy, the banks obviously will ask for a bit bigger amount of deposit than the citizens. The deposit for the mortgage could be a maximum of 40-50%, not more than. Usually, Italian banks lend money to buy residential properties only and in case your age is over 70, you will need a young guarantor who would stay accountable to pay the bank back.


Pre and post-mortgage costs

On a crucial note, you will need to bear the essential charges to obtain a mortgage and taxes while purchasing the property. The essential costs include-


  • Bank application fees for the mortgage.
  • Surveyor charge (before passing your mortgage request, the bank would appoint an expert to examine and evaluate the valuation of the property. Based on the reporting bank would decide the right mortgage amount.)
  • Insurance charge (while purchasing the property.)
  • Mortgage tax (to be paid to the government.)


Essential documents to get a mortgage

When banks lend you people’s money, proper documentation is a must. For this reason, make sure you have all the following documents before you apply for a mortgage. 

  • Valid passport.
  • The agreement for sale.
  • Last year of credit statement.
  • Valid current residential address proof.
  • Proof of income (including your employment letter and initial status, last 2-3 tax receipts and payslips of last 3 months)

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