Tuesday, February 17, 2009

The Mortage Process - What to Expect

Many people in the region will be thinking about mortgages as your property nears completion. Here are some of the associated costs.

Mortgage costs

The only cost you will see when your loan is being processed is the property valuation charge at approx €230. When the mortgage is agreed and the funds are released they will be in the form of a bankers draft - Please note the following will be deducted.

Application fee

1% of the loan amount

Building insurance

This will vary, but please note this does NOT cover contents


Mortgage registration tax (imposta sost├Čtutiva)

0.25% of the loan amount if you apply to be an Italian resident (first home), 2% of the loan amount for second home (non-Italian resident).

The initial funds will be released to the notary and only paid to the vendor or to the borrower when the mortgage charge (ipoteca) has been registered.

Completion fees (€110) and pre-first instalment interest to be paid with first payment.
Administration fee of €5 will be added to every instalment.

Additional Costs When Purchasing - I know this has been covered in a previous post, but always worth mentioning

New properties - VAT or 'Imposta sul Valora Aggiunto' (IVA) - this is only payable for new properties and varies from 10% up to 20% for luxury homes.

Re-sale properties: transfer taxes come to around 10%, comprising registration tax (7%), mortgage tax (2%) and land survey tax (1%). If the property is to be the main residence (i.e. customer moves in within 18 months and doesn’t move out of the area for five years), registration tax is reduced to 3% and the mortgage and land survey taxes reduced to nominal sum (around €129 each).

Notary fees - these also vary according to the declared value. Allow around 1% of the purchase price.

Solicitor - 1-2% of the purchase price.

Agents Fees - Variable, negotiate. If you bought of plan all the agents fees will have been included.

Surveyor's fee – if you need the services of a surveyor, the fee is usually around €500-€1,000.

Please note this posting does in constitute financial advice, but will again assist you in getting the overall cost clear in your mind.

This is a subject that will feature as and when I have information I think will be useful to you.

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