Frequently Asked Question #80:
Q: What financing is available to purchase a property in Italy?
A: It is possible for both EU and non-EU citizens to obtain a mortgage in Italy. Italian banks ask for a proof of income in your home country, and for a reference from your home bank. The amount you can borrow depends primarily on your annual income: the higher your income, the more you can expect to borrow.
The common method of providing the loan is a variable-rate Euro mortgage. Euro-denominated mortgages may be based on the European Central Bank (ECB) minimum bid rate (MBR): more commonly they are based on the Euribor 3 month rate (E3M). Unlike the ECB MBR, Euribor rates change every working day. To calculate the rate of interest you would have to pay if you were to obtain a Euro mortgage today, visit the Euribor website (link given above), download the most recent historical data, and find the latest 3 month figure (E3M). This will be slightly higher than the MBR if Euro interest rates are trending upwards, and slightly lower than the MBR if Euro interest rates are trending downwards. Use the E3M figure to obtain your mortgage rate from the following table:
| Repayment Term | |||||
|---|---|---|---|---|---|
| Capital | 10 Years | 15 Years | 20 Years | 25 Years | 30 Years |
| Less than €100,000 | E3M + 1.20% | E3M + 1.30% | E3M + 1.40% | E3M + 1.50% | E3M + 1.65% |
| More than €100,000 | E3M + 0.95% | E3M + 1.05% | E3M + 1.15% | E3M + 1.25% | E3M + 1.40% |
Note:
- The longer the loan term, the higher the rate of interest.
- The larger the loan, the lower the rate of interest.
- The information in this FAQ is based on the typical experience of our clients: the rates offered in a specific case may vary slightly from the figures presented.
- Because E3M changes daily, repayments will fluctuate in line with the average E3M in the month preceding each repayment.
Examples
1) On 1st March 2007, I take out a loan of €200,000 to be repaid over 20 years.
From the Euribor website, I see that the E3M rate on 1st March 2007 was 3.856%. From the above table, I see that my initial repayment rate would have been 3.856 + 1.15 = 5.006%
2) On 15th January 2008, I take out a loan of €80,000 to be repaid over 15 years.
From the Euribor website, I see that the E3M rate on 15th January 2008 was 4.541%. From the above table, I see that my initial repayment rate would have been 4.541 + 1.30 = 5.841%
Now that you have calculated your initial interest rate, you can if you wish use our mortgage calculator to calculate your monthly repayments. Note that there are generally no penalties if you want to pay a mortgage back early.
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