When it comes to securing financing for your property, your case will be looked at individually and taken on its own merit. Nevertheless, our Sliema branch manager Michael Mifsud talks us through some of the key elements of getting your home loan approved.
As a rule, banks in Malta will usually give 80% of the value of the property as a loan. Each time a loan is applied for, the bank will launch an investigation into your background and earnings, and assess the amount that you can comfortably pay back each month. It’s worth noting that banks are usually more conservative when loaning money to foreigners and that an 80% loan is unlikely in this case.
Over the course of your loan repayments, you may find yourself in need of a moratorium – a stipulated period of time when you will be able to take a break from making your monthly payments due to extenuating circumstances. For instance, if you’ve run out of money while finishing your home, a moratorium could give you a few months to get back on your feet. It could also apply in a case of emergency, should you have to take time off work and will not be earning. When it comes to your eligibility for a moratorium, you will need to speak to the bank, as they will have the final say on whether you qualify or not. It’s also worth noting that you will still have to pay interest during the moratorium.
A bridge loan is given to customers who need to finance the purchase of a new property while still paying off a current one. You may need one if you fall in love with a property you don’t want to lose but still haven’t sold your existing one. This type of loan is only given for an interim period and repayments are made at a higher interest rate, which can end up being very pricey. As a result, none of the major banks in Malta recommend bridge loans as a rule, although the final decision will lie with you.
If you want to get a loan, your first step will be to visit the bank so as to assess the amount you can realistically borrow – based on your savings and monthly earnings. Each case will be judged on its own merit, and will be determined by how long you’ve been in your current role at work, your history with the bank, and whether you’re buying alone or with someone else. The bank will also determine the rate of interest that you will pay (this is currently fixed around 2.5% but does vary).
Once your loan application has been assessed and the amount decided upon, the bank will issue you with a sanction letter confirming that it will be loaning you the money. Your notary will need that letter so as to start searches on your property and so you can successfully move the buying process on.