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Mortgages for Expats in Malta

Author: Jim Newham
Submitted: November 2013

Maltese banks are conservative in their outlook and lending policies. Some lenders do not lend to non-nationals, but others specialise in dealing with foreign customers and will be willing to offer you a mortgage provided you meet the status criteria.

Requirements

You must have an active Maltese bank account in order to apply for a mortgage. Before you apply for a Maltese mortgage, you must also have the permission of the Central Bank of Malta. Furthermore, most lenders require you to take out life insurance as a condition of granting you a mortgage. Other types of insurance may also be required.

Terms

Foreign borrowers can normally expect a loan-to-value ratio (LTV) of up to 80%, or, in some cases, 90%, for either purchase or re-mortgaging. Note that this percentage is based on the lower of the purchase price of the property or the valuation. In any case, the down payment you need to raise will probably be at an affordable level. Maltese banks often have a minimum loan figure, which is typically €25,000; there may also be a maximum loan limit of up to €1,000,000.

Your ability to obtain a mortgage in Malta is firmly linked to your ability to pay. This is most clearly demonstrated in the requirement for a certain debt to income ratio. All the debts and liabilities you incur, including the proposed mortgage, must be no greater than 35% of your total income. Note that prospective income from renting out your intended property will not be included in your total income.

The maximum repayment period of the mortgage is usually 30 or 40 years. The minimum age for taking out a mortgage is 18 and the maximum age at full term is 65.

Mortgage types

Both fixed rate and variable rate mortgages are available. The fixed rate term is normally around five or six years. There are also the usual options for capital and interest repayment or interest only. Standard repayment mortgages are more popular, however, as interest only mortgages tend to have very short maximum terms of only 5 or 6 years. This means that, in most cases, you will need to have a substantial amount of capital before you take out the mortgage. There may also be minimum income requirements attached to interest only mortgages.

Interest rates generally vary from an APR of 3.15% up to 4.75%. In keeping with the rather conservative nature of Maltese lenders, options for early repayment tend to be limited, with exit fees in operation.

Application

In addition to the mortgage application form, documents you need to apply for a mortgage typically include:

  • Passport, driving licence or other means of ID
  • Proof of address
  • proof of income:
    • your last 6 months’ payslips
    • your last 6 months’ bank statements
    • your most recent tax certificate or employer’s reference
  • proof of income (self-employed):
    • your most recent audited accounts
    • your last 6 months’ personal bank statements
    • your last 12 months’ business bank statements

Other documents that may be required include the preliminary agreement for property purchase.

 

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