Maltese Government offers Loans for First-Time-Buyers

Getting your foot on the property ladder is the goal. If you dream of owning your own home but find that counting your pennies is disheartening, you are certainly not alone. Getting your hands on your first home in Malta or Gozo is nowhere near as easy as it once was.

The truth is, the cost of living in Malta has risen – we’ve all felt it, we’ve all had to adapt and we’ve all talked about it. And it looks like the government is listening.

In its budget announcement back in October 2019, the Maltese government announced that €3 million would be allocated to a scheme to help first-time buyers.

The scheme would come in the form of a loan. But, for a long time, we didn’t know much more than that. Finally, we’ve received the information all young first-time buyers need to know.

Are you a first-time buyer with questions about the government loan? Here, we give you some answers.

What is the first-time buyers’ loan?

The government is helping young prospective homeowners enter a new world of real estate possibilities. As from June 2020, first-time buyers who meet specific criteria can apply for a €17,500 government home loan.

In a nutshell, the loans scheme aims to subsidise the deposit for property buyers who are under 40 years old. Through the initiative, prospective buyers will see 10 per cent (or up to €17,500) of the deposit taken off their shoulders.

The loan is being offered by the government through local banks. So, besides support with the deposit, the government will also cover the interest charged on the bank loan.

This is all great, but the question is, what’s the fine print?

1 Eligibility

The first-time buyers’ loan is being made available to buyers aged between 21 and 39. And, the idea is to help those who don’t have enough money to cover the initial deposit.

Minister for Social Accommodation, Hon. Roderick Galdes, has outlined the scheme as being for those young people struggling to cover the deposit of 10 per cent of the property’s value. If people can’t afford the deposit, then banks won’t grant mortgages. This is where the government’s loan comes in.

Age is not the only determining factor, however. The loan also comes with conditions related to income and marital status. The scheme is therefore available to:

  • Single persons aged between 21 and 30 with a gross income between €19,000 and €25,000.
  • Single persons aged between 31 and 39 with a gross income between €25,000 and €35,000.
  • Couples aged between 21 and 39 with a gross income between €19,000 and €35,000.

And, crucially, applicants won’t be eligible if they have capital assets that exceed €17,500.

2 Pay-back period

The key thing to remember is that this is a loan and not a grant. So, of course, it will need to be paid back. Eligible first-time buyers, however, are being given a generous pay-back period of 25 years.

But, if you think that you’ll be able to pay off your loan sooner, you’ll receive some perks.

The government is offering a five per cent discount to people who repay their loan within five years. If that sounds a bit too tight, don’t worry. Those who pay it back in five to ten years will receive a two per cent discount.

3 Property price

The loan will undoubtedly act as an incentive for young people to buy homes rather than rent. However, it’s essential to know that the loan doesn’t simply cover every available property.

The first-time buyers’ loan is only applicable to properties with a value of €175,000 or less.

Why? Because following research conducted by the government, €175,000 was deemed the average amount that young first-time buyers – who can’t afford the deposit – spend on their first homes in Malta.

What this means is that those who can afford a property of a higher value are more likely to have fewer issues covering the deposit. They are therefore less likely to need assistance.

4 Getting the loan

The first-time buyers’ loan is being made available through two local banks: APS Bank and Bank of Valletta. While prudency on the banks’ part is expected in the current climate, APS and BOV are acting through their social responsibility to the country.

So, the loan you need is here, but you’ll have to act quickly. The scheme is only open to the first 300 applicants.

The government has promised to review the loan yearly, but this is the starting point. And it’s one that we are glad to see.

If you’re interested in applying for the first-time buyers’ loan, the public has been invited to contact the Housing Authority in Malta.

RE/MAX recommendation

At RE/MAX Malta, all our associates keep up to date with the latest – and evolving – financial incentives being made available to all buyers, and not just first-time buyers or those in certain age brackets.

So, we suggest turning directly to the RE/MAX Malta associate responsible for the property you’re interested in. He or she will be able to give you advice tailored to your specific situation.

There’s lots of information to get through, so let the experts filter it for you.

Are you a prospective first-time homeowner in Malta or Gozo? Speak to a member of the RE/MAX Malta team today to hear about all the financial incentives open to you.