Maltese Mortgages
The island of Malta is a popular tourist destination for a good reason, as it has some fantastic natural landscapes and an excellent climate. It’s also cheaper to live in than in many EU countries, although, the Maltese property price and other living expenses will vary depending on where you opt to live.
Getting home loans in Malta is a more than reasonable prospect, even for non-residents. There might, however, be a lot of paperwork to fill out and patience to practice. This article will take you in-depth into how mortgages in Malta work.
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The situation in Malta
Since joining the EU in 2004, restrictions on foreigners have been significantly relaxed. And because English is one of the country’s two official languages, you’ll have no issues arranging your documentation and communicating to get your mortgage.
Buyers are often drawn to areas such as St. Paul’s Bay due to the large variety of restaurants and attractions. Others may want a more laid-back lifestyle and, therefore, might seek out property in Rabat or the island of Gozo.
Requirements for mortgages in Malta
Usually, to lend from a Maltese bank, you’ll have to take out a minimum loan of €25,000 and can take up to a maximum loan of €1,000,000. This does give you some freedom to purchase both lower-end and upper-end properties.
However, to be able to get home loans anywhere near the maximum loan, you’ll have to pass scrutiny by Maltese banks, who will carefully evaluate your income to determine whether you’re genuinely able to make the payments.
Additionally, lenders expect that every debt you have and the future anticipated mortgage payments will be no more than 35% of your total income. For example, if you have expected debt payments of €700, you’d have to earn at least €2000.
With Maltese mortgages, you’ll be committed to meeting the maximum repayment period of 30-40 years.
What you’ll need
Specific requirements will have to be fulfilled to borrow from Maltese banks. These include but are not limited to the following:
- You’ll need an active Maltese bank account, which means if you don’t have one already, you’ll have to open one in Malta.
- You’ll need to purchase life insurance as security for your mortgage. So if you have any severe health issues, this could become a barrier to getting a mortgage in Malta.
- You’ll need to have permission from the Central Bank of Malta.
Additionally, the mortgage application process requires several documents from you, including:
- Proof of monthly income: this depends on whether you’re self-employed or employed by a company. Self-employed individuals will be required to provide at least 12 months of business bank statements and six months of personal bank statements from their bank account. Employed individuals need only provide the latter from their bank account.
- Proof of address.
- Your identity document.
- And a preliminary agreement to buy the property.
Should a lender approve your Maltese mortgage, you’ll receive what is known as a mortgage in principle. This grants you a mortgage offer that’s valid for six months. During this period, you’ll have time to find a property.
The mortgage application process and getting a preliminary agreement may take some time.
LTV rates in Malta
Most Maltese lenders will consider lending a home loan with LTV rates up to a maximum of 90%; however, it’ll generally be around 80%, if not less, depending on certain circumstances.
Lenders will generally independently value the worth of the property. So, you may not even get the market value if they value it at a lower cost. This’ll either require searching for further funding or negotiations with the seller.
Is a 100% mortgage possible in Malta?
As a non-resident, it really won’t be very easy to get a 100% mortgage. Only a select few Maltese and UK lenders might consider providing a mortgage like this, and it would have to be in exceptional circumstances.
What if I have bad credit?
Interestingly, Malta does not have a credit scoring system. This might work in your favour as they do not view credit the way we might in the UK. That said, they will still ask for bank references.
This means that if they can see that you’re reasonably able to afford the mortgage and don’t anticipate that you’ll struggle to pay debts in future, you should still be able to get your mortgage.
Mortgage terms in Malta
In Malta, you can get a mortgage for as long as 40 years. The average mortgage term is usually from 30-40 years. Unfortunately, however, the maximum age, or “cut off” age, for a mortgage is the age of 65, which is a lot lower than in some other countries.
That means that by 65, you should have paid your mortgage in full. Thankfully, you can start your mortgage at 18. The sooner you get started with your mortgage application, the better.
Getting a mortgage on a Maltese holiday home
Getting a mortgage on a holiday home in Malta is definitely possible; many investors are interested in purchasing holiday homes on this island paradise. Contact our team at Loan Corp to assess your eligibility for a home loan on a holiday home on 0808 301 9509 or fill out our form to contact one of our mortgage professionals.
Types of Mortgages in Malta
Getting a mortgage in any country is a big decision. It’s a commitment you might make for up to 40 years, so it’s not one to take lightly. That’s why deciding on the right kind of mortgage is important. and why we will explain what they are and how they work.
Fixed-rate mortgages
Fixed-rate mortgages are those with unchanging rates for the period of the mortgage term, usually 5-6 years, subject to renewal. They’re great for buyers looking for stability and certainty of what they’ll have to pay. However, the interest rates may be a bit higher due to this benefit.
Variable-rate mortgages
Variable-rate mortgages shift depending on the prime rate of the central bank and may also vary slightly depending on the lender’s own standard rates. Unlike fixed-rate mortgages, here, you may get lower interest rates, but they’re also subject to fluctuations that could significantly increase the cost of your monthly payments.
Interest-only mortgages
An interest-only mortgage is one where you pay a specific fixed interest amount every month, up until the end of a period, where you’ll have to pay the mortgage in full.
Costs of getting a mortgage in Malta
You’ll still have to factor in several costs when getting a Maltese mortgage. This includes registration fees, stamp duty, and notary fees. This can work out to around 5-7% of your purchase price.
And bear in mind that if you’re purchasing a property to rent, income made from the property will be subject to Maltese income tax, which can be 25%, 15%, or 10%.
Assessing your property’s condition
Although not strictly a necessity, it’s an excellent decision to have a survey done on the property you’re interested in purchasing. In Malta, you may find quite a few good deals on homes, but these are often not new builds but older stone properties. These could come with several problems that aren’t readily apparent.
Although this may cost some money to do, it is essential to do for properties that you’re seriously interested in buying.
Contact us for help with your mortgage
Our highly-qualified mortgage team at Loancorp is ready and able to assist in the challenging process of acquiring a mortgage. We can help make things much easier for you and offer sound mortgage advice.
You can call us at 0808 301 9509 or request a quote by filling out this form. We’ll ensure that we answer your queries within two hours between Monday to Friday and four hours over the weekend or on a bank holiday.
FAQs
Can a foreigner get a mortgage in Malta?
Yes, a foreigner can get a mortgage in Malta; however, you might experience some reluctance from local lenders. Specialist Maltese lenders will be able to help you with a mortgage, but you’ll need to meet their eligibility requirements.
How much loan can I get in Malta?
The home loan you can get in Malta will vary from lender to lender. However, we’d say that generally, you can expect anywhere from an 80% loan or less. In some rare circumstances, you might be able to acquire a 95% loan, but that’s relatively uncommon. 100% LTVs are even less common.
How much deposit do I need to get a house in Malta?
Usually, you’d have to put down anywhere between a 10-30% deposit on your home in Malta. This could be pretty expensive depending on the cost of the home you purchase, which can be anywhere up to € 1, 000 000.
What are the mortgage rates like in Malta?
The mortgage interest rates in Malta have fluctuated over the years. Back in September 2008, it was a whopping 5.45%, whereas, in 2021, it went down drastically to just 2.77%. Mortgage rates may vary from year to year.
Contact us now to get started on your mortgage application for a property in Malta.