Why take a home loan?
Understanding the basics of a home loan
Purchasing a home is one of the biggest financial decisions you will make in your life and it can seem quite daunting, but always keep in mind that your repayments will more or less remain the same for the duration of the loan (given interest rates do not go up). As your career progresses, you will be earning more in no time at all, affording you to repay the loan off quicker if you want to. On top of that it is unbelievable how quickly you will get used to repaying the loan if you are disciplined enough and have your priorities right.
Purchasing a home is a form of long-term savings: there will be capital appreciation of the property itself and it will also prevent you from paying money into the pockets of a landlord. In the latter case of renting a property, that is money you will never ever see again! On the other hand think of repaying a home loan like this: if you bought wisely and the property’s value appreciates, it can even financially work out that you have “lived for free” while owning it, as any profits you make when selling the property is yours to keep and it can work out in total to be more than what you have repaid for the duration of the loan!
So, let’s discuss the basics: in Malta and all over the world for that matter, home loans are a common way to finance a major purchase such as buying a property. But, it is important to understand the fundamentals of home loans to make an informed and wise decision.
Here is a short guide to help you understand some of the mysteries surrounding home loans:
What is a Home Loan?
- A home loan is a type of loan used to purchase a property.
- It is a secured loan, meaning the property being purchased is used as collateral, but the collateral can also consist of part savings that you will be expected to contribute such as a deposit.
- The loan amount is usually paid back in instalments over a pre-agreed period of time and in Malta this is usually based on your present age to your retirement age although you can choose shorter periods of time.
- Never opt for the longest period of repayment just because it may seem cheaper: it isn’t!
- Start by working out what you need to pay back as the minimum amount and then see what you can additionally and comfortably afford on top of that, in order to shorten the repayment period as much as possible.
- Don’t overstretch yourself, as you will need to have additional money on a monthly basis to pay for all the basic costs of living a normal life!
Typical Home Loans in Malta
- Home loans for First-Time Buyers.
- Home loans for buying another or second home.
- Home loans for a “Buy-to-Let” property.
All of these loans have their own unique sets of criteria and repayment options. Our best advice is to speak to your bank or lending institution and see what you qualify for.
Eligibility for Home Loans in Malta
- You must be 18 years or older and a resident of Malta.
- You must have a stable income and a good credit history.
- Your total debt should not exceed a certain percentage of your income.
- You may need to show that you have additional funds to put down as a deposit, but this may be optional.
Documents Required for a Home Loan Application
The list below is an outline and additional documentation may be needed, depending on the lending institution.
- You will have to supply your latest FS3 and payslips for at least 3 months and if you are in employment or
- Valid and official income tax returns covering the last 3 years in the case where you are self-employed.
- You will have to supply and provide statements of any loans or hire purchase agreements that will not be settled in full before the contract date of your intended property purchase, if applicable.
- You will have to supply up-to-date credit card statements should you have any credit cards.
- Provide a valid National or residents ID or passport.
- Provide the Promise of Sale/ Konvenju or Prelimenary Agreement that you have entered into or intend to enter into.
- Supply approved drawings and plans of the property’s layout plus
- Supply the necessary Planning Authority Permits for the property you are interested in buying (this you can obtain from the seller/vendor or an architect/ a warranted architect/or the Planning Authority.
- A legitimate land registry or site plan (which you can also obtain from an architect as in the above).
- A registered architect’s valuation form of the property.
- An Energy Performance Certificate applicable to the property you intend buying
- Evidence of your income.
- Provide a recognised and official contract of employment (if you have one)
- If you are registered as self-employed, you will need and official VAT statement covering the last financial year.
- Provide proof of your National Insurance contributions on an official statement covering the last year.
How to go about Applying for a Home Loan
- First do some research on different lenders and compare their interest rates and loan terms, as they will differ from one to the other.
- Determine how much you can comfortable and realistically afford to borrow and repay.
- Submit a the loan application to the lender of your choice.
- Provide all the necessary documentation as discussed above.
- Wait for the lender’s final decision.
- If you get approved, sign the loan agreement and complete the process.
The advantage of a home loan is that it allows you to purchase a property which you may not have been able to afford otherwise! It also allows you to build equity through your property. Keep in mind that buying a property is a long-term investment and you need to be ready for it and absolutely disciplined and committed. You will be:
- Tied to the repayments for a considerable period of time.
- Interest rates may vary in the future.
- If you any miss payments, you may risk losing your property.
As aid, home loans offer a convenient way to finance the purchase of a property. However, it is important to understand all the conditions that apply, the different types of loans, the eligibility requirements and of course the entire application process. Make sure you have given careful consideration to your financial situation of choice and investigated all the options, that you have done research into different lenders and compared what they have on offer as this will help you make an informed decision and find the best home loan for you. Always make sure you speak to one of our property professionals as we have helped many thousands of home owners acquire their first, second and other additional properties over the years.
We have Great news for First-Time Buyers!
If you are a first-time buyer, we have some exciting news for you!
We have negotiated an UNBELIEVEABLE DISCOUNT AND SAVINGS PACKAGE that is exclusively available through us. Working with Malta’s leading banks, retailers and suppliers we have negotiated a total savings package worth over €15,000 that can go towards realising your dream of owning your first home!
To sweeten the deal further, there’s the stamp duty reduction that the government is offering: as a First-Time Buyer (if you purchase a property till the end of 2023), NO STAMP DUTY WILL BE DUE on the first €200,000 of the property price. This can amount to savings of up to €10,000 (based on standard rate of 5%). Should a buyer opt for a property of a higher value than €200,000, for contracts signed by end of 2022, stamp duty is paid at 5% on anything above €200,000. This is the very best time for First-Time Buyers to take the plunge and benefit from these massive incentives and discounts! But wait, there’s even more: First-time buyers will also be eligible for a further one-time €10,000 grant spread out over 10 years. The grant will go towards the payment of the buyers’ home loans and will also cover property purchases till the end of 2023. The maximum allowed value of the property is €500,000.
Excited? Here’s more about our exceptional, exclusive First-Time Buyer’s Pack worth over €15,000 in vouchers and savings (find out exactly what the details are on our web page):
- APS Bank will waive all your fees, and provide you with a handsome reimbursement on notary fees.
- The ATRIUM will offer you a discounts kitchens, furniture & soft furnishings.
- Discounts on bedrooms, fabrics, carpets and blinds from B4 Group (Mosta and Fgura).
- Get extra discount on Gres floorings, tiles & fittings from B&M.
- Discounts on your reverse osmosis sets, solar water heaters, PV systems, ACs and MORE from Bajada New Energy.
- Discounts on BT Commercial’s range of Solar (PV) Panels, air-conditioners, heat pumps and home appliances.
- Discounts on kitchens, bedrooms, living rooms and sofas from Carmelo Delia & Sons.
- A huge discount towards your first year property insurance from GasanMamo Insurance.
- A full home package from Chateau d’Ax for under €10,000!
- Discount off your new kitchen from MITON.
- Discounts on all product ranges when bought online through gwarnic.com.mt
- Discounts for wall art products when bought online through photociancio.com
- Discounts on white goods and home appliances from ITC.
- Discounts on bathrooms and sanitary ware from waterART Concepts.
- Discounts on furniture from Joinwell.
- Discounts on Eglo light fittings from ITC.
- Discounts on all Scavolini kitchens, bathrooms, living room furniture and closets.
- Discounts on Calligaris, Pianca, Mobilstella, Record / The Cut, Crosswater and Scavolini products from OnePerCent.
- Discounts on the full range of Quickstep parquet, vinyl, laminate and decking flooring solutions PLUS a free on-site site visit.
- Discounts on purchasing white goods.
- Discounts on the full range of internal doors from Dimech Enterprises Ltd.
If this is not enough to bring a smile to your face, we add more suppliers to the list on a regular basis! To find out EXACTLY what discounts you get on what, make sure to visit our First-Time Buyer’s page.
This all goes to show that we do far more than just sell properties to First-Time Buyers! We will accompany you through the entire process: from choosing your first selection of properties to view, then on to the process of elimination and finally deciding on “the one”! On top of that we will negotiate on your behalf with vendors, assist you with applying for bank loans, complete all the paperwork and deal with notaries on your behalf. We will also sit with you and discuss which of the discounts and incentives we exclusively offer you want to make use of and which government incentives you qualify for.