There’s lots of evidence to suggest that buying a home is 90% emotion and 10% logic, but one cold, hard fact you can’t avoid is that your budget is not elastic. Before you look at a single property, you need to understand how much you will be able to borrow from the bank. This is how it works:
- Banks in Malta generally require a cash deposit of at least 10% of the property price (20% for non-residents).
- How much the bank will lend you depends on your income and also your age, that is, how close to retirement age you are. If you’re buying with a partner or spouse, both incomes are considered. Monthly payments usually cannot exceed 30% of your total monthly income.
Several banks have loan calculators on their websites to give you an idea of what you could borrow. These calculators are a good place to start. The APS and BOV calculators are two good options for you to check out.
An Example Loan
In real terms, this is how it looks: if the bank loaned you €140,000 at a fixed interest rate of 2.5% for the first 2 years, then 3% for the remaining 336 months (based on a total term of 30 years to repay your loan in full), you would pay €556 per month for 2 years, then €592 per month for the rest of the loan. You would need a deposit of €14,000. These are ball park figures – you have to visit the bank to see what they will offer you personally.
Additional charges might include:
- a processing fee (usually €50-€500)
- legal processing fee (usually €100-€200)
- booking fee (approx. €100)
- searches fee (approx. €15-€50)
- post-deed checking of hypothecary fee (approx. €30).
- life insurance (this can be quite pricey the older you are)
- buildings insurance.
- purchase costs including stamp duty and notary fees (click here for more details).
To finalise a loan, you’ll need:
- Bank references
- Your payslips and recent FS3
- An ID card or passport
- A copy of the preliminary agreement
- Property value estimate
Remember: If you default on the loan, the bank can claim the property and you will lose your deposit.
The best way to get started is to book an appointment with several banks to see what you are eligible for.
Meanwhile, have a look at the property marketing in Malta here.