# Mortgage for house, anyone got a suggestion for bank?



## jasonjm (Nov 11, 2015)

Hi all.

Live in USA, trying to buy a house in italy, and I do want a Euro based mortgage as I reckon the euro has nowhere to go but down, but that is another story

the problem I am seeing is the rates I am being quoted seem too high.

I was under the impression on a variable mortgage, my rate should be EURIBOR plus 1% to 1.85%

so my rate should be basically 1% to 1.85% or so as euribor is zero.

I get quoted nothing at under 3% which makes me suspicious.

Anyone have any info, or a good bank / contact for the umbria / tuscanny region? (that can speak english)

thank you.


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## BBCWatcher (Dec 28, 2012)

jasonjm said:


> the problem I am seeing is the rates I am being quoted seem too high.


Would they be higher because you have no credit history in Italy?


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## jasonjm (Nov 11, 2015)

perhaps...... but when you put 50% down on a house, how much skin does the bank really have in the game? nothing.

if housing prices in italy crashed another 50% from here, all the banks would be done for anyways.


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## BBCWatcher (Dec 28, 2012)

jasonjm said:


> perhaps...... but when you put 50% down on a house, how much skin does the bank really have in the game? nothing.


No, they've still got skin in the game (or would). It's not only about the equity. It's still painful for the lender if the borrower defaults. It's also painful if you "flip" quickly and prepay the loan, and buyers without good Italian credit histories tend to do that, too. There are fixed costs to loan origination and loan closure, and those costs aren't necessarily always quickly recoverable.

This is actually good news for the Italian economy, that lenders were and remain cautious. Unlike, say, Spain and (now) Greater London.

You could try approaching a global multinational bank that knows your U.S. credit history and that also lends in Italy to see if you can get a better deal. That might not work, though. Another option is to avoid buying property in Italy for some period of time, develop an Italian credit history, and then consider buying. Who knows, but I don't think there's any rush required here. You're predicting the euro will strengthen "soon," but I don't think that's likely, and market consensus agrees with me for what it's worth. But if you want to take the other side of that bet, make your bet using the futures/options markets. You don't need a euro-denominated mortgage to make that bet.


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## jasonjm (Nov 11, 2015)

I guess. I contacted ING today who I used to bank with to before they fled the USA to see if they do business in Italy, maybe that will work.

What really complicates it though is no Italian banks post rates anywhere, so I have no benchmark to compare to, it is very strange. How do Italians shop rates? just go to their local bank and take whatever they are offered?


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## BBCWatcher (Dec 28, 2012)

I don't think that's a _unique_ complication. In the U.S. mortgage rates (and other costs, such as closing costs, points, etc.) depend on the credit worthiness of the borrower. You still have to shop around, and a personal relationship with your local banker still counts for a lot.

It is true that real estate in Italy is less liquid than it is in the United States, on average. The U.S. has comparatively higher rates of internal and external mobility. Whether that's a good or bad thing depends on your point of view, but it is true that Italy has been less prone to real estate bubbles.


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## jasonjm (Nov 11, 2015)

yes, I understand credit worthiness is important. But at least in the USA I know assuming borrower has great everything, I can within 30 minutes of being on the internet work out every detail of what the best rate for that mortgage would be, closing costs, etc down to almost the last dollar.

Italy? just a million pages saying submit an application and we will call you. So I literally have no idea what a local Italian with great credit and a perfect application would pay?

therefore whenever a situation like this arises, I always become very cautious, because with such a lack of transparency, I am at a major disadvantage talking to any Italian lender.


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## pudd 2 (Dec 10, 2008)

jasonjm said:


> I guess. I contacted ING today who I used to bank with to before they fled the USA to see if they do business in Italy, maybe that will work.
> 
> What really complicates it though is no Italian banks post rates anywhere, so I have no benchmark to compare to, it is very strange. How do Italians shop rates? just go to their local bank and take whatever they are offered?


i would not advise this , afreind of mine done this the house got hit by a eathquake and he is still paying for somware he cant aford to repair or live in 
take a italian morgage if it gets hit or slides away do to frana you can just walk away as its nearly imposible to get insurance for quakes or land slides 

iam not reading this from a book 6 people i know have lost there houses this way s

so beware


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## Bevdeforges (Nov 16, 2007)

I think what you may be up against here is the very different banking system we have in Europe.

I don't know the Italian system all that well, but I can tell you that throughout Europe (with the exception, perhaps, of the UK), there is a BIG difference between having a "regular" bank account and having a "non-resident" bank account. In many countries, to get a mortgage from a bank for residential property, you would need to have an account in the bank giving you the mortgage - and terms for those with "non-resident" accounts are generally very different (i.e. higher rates) than those for locals who have their paychecks deposited directly into their accounts.

Certainly here in France, mortgages are pretty strictly regulated by the State (and what I've seen of Italian bank accounts possibly even more so in Italy). There are usually limits to what percentage of your monthly income can be used to service the mortgage, and the bank becomes the arbiter of what they consider your credit-worthiness to be. 
Cheers,
Bev


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## BBCWatcher (Dec 28, 2012)

The statistics exist, but you just have to go looking for them in different places. The European Central Bank, for example, periodically publishes mortgage rates. I found data for February, 2015, pegging the average lending rate for home purchases in Italy (for mortgages of over 10 years) at 3.53%. If you're getting a 3% quote you're already doing better than the ECB's data suggest.

A 10 year Italian government bond is yielding about 1.65% at this instant as another reference point. You'll pay more than the government's borrowing rate, obviously. Again, if you're getting a 3% quote, that's not much of a risk premium really. The U.S. 10 year is 2.31% and U.S. ARMs are at 3.39% (as I write this), so that all fits.


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## NickZ (Jun 26, 2009)

Barclays Italia is one of the few Italian banks that offer mortgages to non residents. But I get the impression Barclays wants to close/sell it's Italian business.

If you're non resident and not working in Italy I don't think ING will help you. At least I don't remembering them offering non resident mortgages.

Things like your age matter. Obviously your income. 

If you have an US brokerage account talk to the firm. They may be willing to arrange a mortgage for you. It's not like they'd have trouble sourcing Euros for you or offsetting the currency risk. 

But if you're non resident and non working or receiving an Italian pension most Italian banks won't touch you.


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