American Mortgage

10/25/2011 - 11:01

A lovely American lady who's ancestors are from my village would like to buy my apartment. She has asked me whether it would be possible for her to obtain a small mortgage to help her to do so of around €40k The property is fully restored and has clean title. So the question is can an American buy in Italy (very likely) and how would an American go about obtaining a mortgage and from whom?



There is no problem for any foreigner to buy property in Italy. For a foreigner to get a mortgage however, is more difficult.  Any mortgage in ITaly is subject to a ceiling of 80% of the value of the property, and are calculated according to income and so on.  THe problem for a foreigner is having to have all the relevant documentation in Italian - and it is a mountain of paperwork that needs to be translated.  Also there are no foreign equivalents for many of the documents needed - you will need for example, 2 years of payslips, in Italian.  It isoften easier getting an international mortgage through a broker.  However, Barclays do do mortgages now in Italy - and the forms are in English, though they have the same lending criteria as Italian banks.  If a euro mortgage isnt important, it may be easier trying to get an American mortgage in dollars on a Italian property.  Which ever way you decide to go, it will be frustrating and expensive. 

Another point to bear in mind with an Italian mortgage - is that the notary's costs will also go up, as a mortgage deed also needs to be stipulated....Be aware too that the mortgage company also places a charge / lien on the mortgage that is registered at the same time as the house.  It is a bit confusing and not always clear (to us foreigners!) as they use the words mutuo and ipoteca in Italian to respectively describe mortgage and first charge / lien but most Italian - English dictionaries translate both words simply as mortgage. Having the charge / lien also means: 1) when the mortgage is finally paid off...the charge needs to be officially removed - and this has to be done by a notary (more cost) 2) if the mortgage is not fully paid when the house is put up for sale, either the buyer has to agree to take over the mortage and charge - or the seller has to pay it off before the sale is absolutely finalized.  This can usually be arranged so that everything takes place at the one time in front of the notary - but it is just a bit more complicated.   Hope this helps!  Much easier to get a mortgage / loan back home - and simply buy outright here!

In my opinion, a "mutuo" is basically a loan. Then, there is a difference between a "mutuo ipotecario" or "ipoteca", which is a mortgage backed by a property and a "mutuo senza ipoteca", which is a loan without a mortgage guarantee. If there is a "mutuo ipotecario" or "ipoteca", the notary will have to make extra charges as there should be a registration of the mortgage and other paperwork. Same thing when you finish paying the mortgage or sell the property before paying the total amount of the "ipoteca". Perhaps Ram could confirm this. In any case, I think that it would be easier for the American buyer to get a loan in America. She could use equity in her present home there.

The ipoteca is the formal legal imposing of a charge against property, so a mutuo ipotecario is what we consider a normal mortgage.  The difference in ITaly is that the ipoteca is a public act stipulated by a notary, (which adds to your purchase costs), and is placed on the property not the person.  This means that you can sell a property with the mortgage attached to it, (which is why we all run round doing visure ipotecarie the day before the act of sale to make sure there is no debt on the property).   Ipoteche can be placed on your property by third parties - such as debt collection agencies and banks, and sometimes you dont know about until you decide to sell.   If you buy a property 'ipotecata' then the owners should clear the debt before the atto, if this is not possible then on the day of the atto you all troop off to the bank - seller, buyer and notary and clear the debt there and then with a slice of the price paid by the buyer.    There is no other way to do this, so bear in mind that other suggestions are dangerous to your financial health! 

Another point for anyone selling a house here to bear in mind - if your buyer is taking out a mortgage, there are often occasions when you won't get your money on the day of the conveyance / rogito.  The theory behind this is that it takes a while for the notary to get everything recorded as it should be, and in the interim, if very sneaky, dishonest etc, you could sell the house to a second buyer on the quiet!  Although I found / find  this explanation quite astonishing - I am assured it is true, so - if in that situation, you need to raise it with your estate agent / buyer / notary in good time, to see if something can be worked out.  Basically it is at the notary's it can sometimes just depend on how accommodating he wants to be.  Essentially the mortgage co. / buyer give him the cashier's cheques (assegno/i circolari) you are owed, and he holds onto them until he has done all the necessary paperwork. I do know people who have had to wait 2 weeks for their money...but when I bought my first house here, with an italian mortgage, we were able to get around the have others I've known too.  But - if the subject comes up - don't think or assume that someone is trying to pull a fast one...they're not!

Some banks will not hand over the money loaned as mortgage until the act of sale has been transcribed officially - if this is the case there is a delay between the signing of the act and the issuing of the money by the bank.  It is not possible, the act having been stipulated publically, to then resell the house, unless the notaio is a complete fraudster and doesnt transcribe the act.   The other reason for delay is the banks, especially when they are granting a loan from one branch and using another to issue the money.  I have known cases where it has taken up to a year to issue the money - but that was down to a particularly inept bank manager.  However, as a rule of thumb, half the banks will give the money at the point of act, in front of the notaio and you can go straight to the bank and cash it.  The other half will wait until the notaio has transcribed the act - which should be 3 or 4 days but every now and again becomes 2 or 3 weeks.   There is nothing you can do about it.  

I just came across this post and can confirm that in three transactions, Ugo was able to secure euro financing for me (American) in the purchase of properties in Italy (most recently in May, 2011).  He is extraordinarily thorough, creative and honest.  In all of my dealings with him he displayed uncommon tenacity and got great results.  I fully understand that lenders have made borrowing exceedingly difficult, but if anyone can make it happen, Ugo can.  He has earned my trust and confidence.  By the way, I have no affiliation with him and offer this assessment as a satisfied prior client of his - nothing more.

I honestly cannot sing Ugo's praises loud enough. After many setbacks, we were about to give up looking for a lender when we stumbled up Mr. Vangiluca.  And even though our purchase has been finalised, he still continues to helps us sort out other matters. I definitely agree with the comment from 'Boschetto' "if anyone can make it happen, Ugo can."  He is definitely creative... and tenacious! 

I took a mortgage out with Barclays bank and it wasn't difficult to organise.  Although I was hoping to pay it off within five years but haven't been able to because of the exchange rate.  It would be alot more expensive to pay off now.