Buying Your First Home
Buying your first property in Malta might feel overwhelming at times. With so many options it can be hard to know where to start from. As one of the biggest decisions you will ever make, it's crucial to get it right.
Most first time buyers start out with a general idea of what they want and refine their criteria the as they go along. The challenge comes when it is time to make a decision and narrow down the options.
To avoid this, go for clarity as early as possible. You should begin your search for your first home with an idea of location, price and type of property. Sit down with your partner and ask questions like:
- What size of property do you need, not just now and in 5 years?
- Which areas of Malta are you familiar with, and where would your prefer to live?
- What kind of amenities do you need close by? (Schools, shops, transport)
- Do you prefer a modern or traditional house?
If you are struggling to answer these questions, you are in the early stage of the buying process.
The Buying Process
Buying your first home in Malta has its own rules and regulations.
After you decide on a property, your consultant will need to negotiate and reach an agreement with the owner. The next step is to enter into a promise of sale (known as the konvenju), which binds both parties to the following:
- Ground rent (if any)
- Payment terms
- Any works to be undertaken by the owner
- Any extras included in the price, such as furniture
- & any additional terms
The Promise of Sale Agreement will be drawn up by a notary. This typically consists of 10% of the purchase price, and is put down as a sign of goodwill by the purchaser. At this point, a 1% provisional duty (part of the total 5% stamp duty) is payable on the value of the property. The terms set down in the agreement will state the date when the final deed can be signed. When a term is not specified the agreement is valid for 3 months. During this term, the notary carries out searches on the history property to verify that it is freely transferable.
Once every condition of the promise of sale agreement is complete and all duties fulfilled, all parties get together to sign the final deed. The contract of purchase is read out and if all is in order then all parties sign it. The balance due is paid to the vendor, the balance of the stamp duty is also paid, and notarial fees are settled. Afterwards, the notary will register the contract at the public registry.
Financing your first home
When it comes to buying your first home in Malta, it is common to get a bank loan as financing. You will need 10% of the purchase price to put down as a deposit. The rest of the funding is usually arranged as a bank loan from top local banks, with monthly repayments.
Your budget will be determined by your income, but do keep in mind that you will have other expenses related to buying property, such as notary's fees, utility bills and regular living expenses. You will also be required to purchase life insurance to cover the value of the property.
It is a good idea to speak to your real estate consultant about these "hidden" expenses. All property transactions include them, and some property owners selling their home for the first time might not be equipped with the knowledge to guide you. This allows you to get the full picture and remain in control of your finances while buying your first house. At Dhalia, we hold regular training sessions for its consultants, ensuring that they are always up to date with the latest developments in the Maltese property market and issues which are important to first time buyers.
A visit to your preferred local bank will give you a clear idea of your budget. Many banks now have online loan calculators that allow you to see an estimate of what you can afford as whole, as well as what monthly repayments to expect. Different banks have different kinds of loans with their own rates, so it is in your best interest to get an idea of what they are offering before making your decision.
Malta Government First Time Buyers' Scheme
The First Time Buyers' Scheme has been offered by the government of Malta for many years, and was recently renewed to run for another term until 31st December 2019.
Under the First Time Buyers’ Scheme, no tax is charged on the first €150,000 of the price of the property. This means that first-timers can save €5250. Buyers purchasing their first residential property will only pay 5% stamp duty on the balance above €150,000 of the price of the property.
No tax is charged on immovable property (furniture) within the purchase.
Finding the right property
Dhalia Real Estate Services has built up the most comprehensive database of properties currently available for first time buyers in Malta.
You can start by searching for your first Malta property and with the guidance of our trained and experienced consultants, you will soon be equipped to find your ideal first home. Our consultants also provide guidance on what type of property is best suited to your needs, what kind of upkeep is needed for each kind of property, as well as bringing to your attention issues you may not have considered before.