Owning your own property is wonderful. It can however also be expensive. Unless you are a multimillionaire, you will normally be working with a budget that sometimes won’t stretch enough to cover the cost of this piece of paradise.

Before you decide to say goodbye to your dream home, make sure to check out the available financial assistance. There is always help just waiting around the corner.

It is best if you begin thinking in Euros. This is the currency that is used in Italy and it will be far better and easier for you to work in that currency rather than in pounds. It will make for a more accurate accounting.

Mortgage

In buying property, a mortgage is always a useful tool. This allows you to pay only a portion of the cost of your chosen property without using up all your savings. A bank or other lending institution can help you with the difference.

If you plan to get a mortgage, you must choose a lender that is registered to do so in Italy. This means you will be working with a local bank like the Monte dei Paschi di Siena. If your bank has branches in Italy you may be able to work with them instead. An example of this is Citibank. A third option is to work with international banks like ABN Amro which are third country, off shore companies.

The interest rate on mortgages in Italy is about 2%. This is the base rate in the Eurozone but is by no means a fixed percentage. It is unlikely to drastically increase though since economies in the Eurozone are simply holding steady. This base rate is lower than the 4.75% rate of a mortgage in the UK.

Mortgages in Italy will usually form anywhere from 60% to 80% of the property value. You will need to come up with the remainder in cash. It is also important to note that a mortgage in Italy is a very straightforward loan. You simply keep paying the amount, clearing it within the specified time limit – usually 10 to 15 years.

You’ll soon have your dream home with a little help from some friends.

There is so much property available in Italy that sometimes it can be hard to choose which one to buy. People normally think of the size of the place they want and then pray that its cost will fit in their budget.

The simple truth is a property that is new is usually more expensive than an older property. The advantage of getting a brand new place is that you will get a property that is up to date. There are less repairs to be made and the roof is less likely to collapse. On the whole the property is probably safer since it was built to modern standards. You’ll be able to move in shortly after you purchase the property.

On the other hand, there are great bargains to be had by buying an older property that may just need restoration or some repairs to bring it up to date. There are additional costs involved but if you choose wisely your total expenses may come in below that of buying a brand new place.

An advantage of an older property is the charm of the place that only time can bestow. There is something special about a place that has history to color it. It is something that cannot be bought. It comes for free with the property.

Before you can begin restoring the property you will need approval from the state and local boards, contractor bids and a clear schedule. Without the approval of the boards, they can have you tear down any work you did to the property.

Keep in mind also that the contractors and artisans of Italy are true artists. They are creating a work of art and cannot be rushed. They are often booked months, in some cases years ahead of time. If you want the best artisans to work on your property, you may need to wait in line. If you aren’t too particular or can’t wait, get bids from other contractors who can work with your schedule.

Irregardless if you choose a brand new apartment or a rundown farm, your very own Italian property will be special.

You’ll find that the process for buying property in Italy isn’t a simple, quick process. There are many practices that are unique to Italy that make for a very unique buying experience.

One of the practices that you want to watch out for is the one called sottodichiarazione or under-declaring the price of the property you’re buying during the final signing of the transfer papers. This is illegal and is definitely something you want to avoid.

The Scam

What happens is, after you and your vendor – or their representative (real estate agent) – agree upon a price they will tell you that they will put a lower value on the deed of sale instead. Usually the price they will indicate can be anywhere from 50% to as low as 35%. This is to allow both the vendor and yourself to save on the taxes, which is based on the sales price.

When you both meet at the office of the notaio, that is when the dirty deed is done. The notaio will prepare the rogito which will reflect the adjusted sales price. The notaio will exit the room as you sign the document and that is when you pay the rest of the true sales price. You pay the vendor the indicated amount, usually by cheque. Then you will normally be asked to place the money in a brown envelope so that it will seem innocuous.

It can be very tempting to do this since it will cut down on the additional costs you must pay (the taxes). You should know however that it can put you in danger of losing your property, as well as put you on the wrong side of the law.

Tax Evasion

The tax authority may become suspicious indicated on the rogito is too low in comparison to the minimum value of the property, which is normally 80% of the indicated rateable value (what they call the rendita catastale). Tax evasion is definitely a crime. You will end up paying far more than if you had simply paid the correct amount.

Diritto di Prelazione

You may also end up losing your property because of under-declaration. There is something called the diritto di prelazione which is the right of the neighbors to buy your property at the declared price. They have one year from the time that your property is registered to decide to buy the property from you. This is particularly used when talking of agricultural lands – farms, vineyards and the like – where an adjoining property may wish to expand their business onto the very property you chose. You might just find your dream home taken from right under your nose.