Mortgages in Malta

Malta’s Mediterranean sun, immersive culture and relaxed vibe appeal to many British property investors.

Restrictions on foreigners owning property became much more relaxed after Malta joined the European Union (EU) in 2004. Most Maltese nationals speak both their native language and English. English is also one of the two official languages in Malta, so you can have all of your documentation done in English, too.

Despite this, some British buyers may be hesitant about the mortgage process in Malta. Many have approached us asking whether it is possible to get one.

Fortunately, getting a mortgage in Malta is easier than you think if you talk to one of the expert advisors we work with. Applying through an international mortgage broker who knows the country and the processes well can be pretty straightforward.

Can I get an overseas mortgage for a property in Malta?

As a foreigner, you may find that some lenders in Malta can be reluctant to lend to you.

That being said, specialist lenders in Malta offer expat mortgages, provided you meet their criteria, which can vary from lender to lender.

It can be tricky to predict whether you are eligible, as you may not be an expert in Maltese lender’s terms and conditions.

This is where one of the expert overseas brokers we work with can help.

To save you from sourcing and comparing multiple lenders and their criteria, they can research the market for you and then recommend the most likely to accept you.

What are the requirements for a mortgage in Malta?

Before you can even apply for a Maltese mortgage, you will be required to do the following:

• Open a bank account in Malta
• Gain permission from the Central Bank of Malta
• Buy life insurance

Maltese lenders also require that all borrowers need to be aged between 18 and 65.

How much can you borrow for a mortgage in Malta?

The first thing to be aware of when getting a mortgage in Malta is that some Maltese banks have a minimum loan, usually around €25,000. There may also be a maximum loan limit of up to €1,000,000.

Most lenders in Malta will consider loaning mortgages with loan-to-value (LTV) rates of 80%. However, in exceptional circumstances, you may be able to borrow up to 90% of the property’s value.

Of course, every lender is different. Many borrowers are unaware that even if one lender rejects them, another may still approve them.

Talk to an advisor for more information on how much you could borrow with a mortgage for a property in Malta.

How long is a mortgage in Malta?

Unlike the UK, the maximum mortgage repayment period in Malta is usually 30 or 40 years.

Be aware that Maltese mortgage lenders do not often offer the option of early repayment, and if you do repay your mortgage early, you may incur a penalty.

How to get a mortgage in Malta

Find an international broker

Accurate and impartial advice is key when getting a mortgage in Malta.

To avoid nasty mortgage rejections on your credit file, work with an international mortgage expert who can guide you.

An experienced broker will:

• Find the best available rates
• Help you download your credit reports
• Negotiate the terms of your mortgage for you
• Handle any paperwork
• Arrange translations if needed
• Check any contracts thoroughly before you sign

If you want to kickstart your Maltese mortgage application, inquire.

We’ll put you in touch with an expert and get you the advice you need to proceed with your application.

Find out if you’re eligible for a Maltese mortgage.

Maltese lenders will focus heavily on your income to determine whether you can afford your mortgage in Malta and whether you’re a reliable loan applicant.

In addition, Maltese lenders will require that all of your debts, including your future mortgage payments, be no greater than 35% of your total income.

For example, someone with a monthly income of £1,600 cannot have debt payments that equate to more than £560 a month.

Knowing in advance whether you’re eligible for a mortgage in Malta can save you a lot of wasted time and money in application fees.

It can also make finding a lender and being accepted for a mortgage much easier, as it filters out any incompatible lenders.

Prepare the right documents in advance.

To proceed with your mortgage application, Maltese lenders will ask you for your:

• Passport, driving licence or other means of ID
• Proof of address
• Proof of income

If you are looking for a  self-employed mortgage, you may also need:

• Your most recent audited accounts
• 6 months of personal bank statements
• 12 months of business bank statements

Find a property in Malta

Once a lender approves you for a mortgage in Malta, you should receive a mortgage in principle. Essentially, this is an offer of a mortgage for a set amount, with agreed terms and conditions.

The offer usually lasts around 6 months, so once you know how much you can afford to borrow, you can start finding a property.

Wait for your lender to give an independent valuation

When you have found a property in Malta that you would like to buy, your lender will need to give you an independent valuation so that they can assess how much they think the property is worth.

If the lender values the property much lower than the market value, you may need to negotiate the property’s price with the seller or find financing for the additional funds needed to make the sale go through.

Life insurance

It is law in Malta that a mortgage must be protected by life insurance, which will usually need to be sourced from a local insurance company. Underwriting in Malta is done in a very similar manner to that in the UK. For this reason, obtaining a mortgage from a Maltese lender may be difficult if you’ve had health issues.

If you’re unable to obtain insurance locally then other options such as raising capital on an asset in the UK or elsewhere could be an option.

Sign the mortgage agreement.

Now that you have a property and a mortgage offer, the only thing left to do is sign your mortgage agreement for your property in Malta. This is known locally as the “promise of sale,” which is the same as exchanging contracts in the UK. It’s normally done fairly early in the process, right after the lender has approved the mortgage.

Can you get a 100% mortgage in Malta?

Although 100% mortgages are available in Malta, they can be exceptionally difficult to obtain as a non-resident.

There are a handful of lenders that will consider providing 100% mortgages, but these are usually offered in exceptional circumstances to Maltese nationals.

That said, there may be lenders in the UK who, in the right circumstances, can offer you a higher loan-to-value.

Can you get a mortgage for a property in Malta with bad credit?

Many borrowers worry that their bad credit will prevent them from getting a mortgage in Malta, especially if they have already been declined for a mortgage in the past.

Malta does not have credit scoring, which is an advantage for buyers with bad credit. That being said, for foreigners looking to get a mortgage in Malta, the lender will usually request a reference from their UK bank.

Even if you don’t have a perfect track record with your bank, the lack of credit scoring in Malta means that all decisions are made by human underwriters. As long as affordability is good, the cause of the bad credit isn’t likely to repeat itself, and you satisfy the rest of their criteria, you could still obtain the mortgage.

Learn more about bad credit.

If you have concerns that your bad credit may affect your mortgage application in Malta, speak to an advisor.

Alternatively, see our bad credit mortgage information section if you’d like more information on this.

Find the best mortgage deal

Buying property in Malta shouldn’t mean that you have to overpay in interest rates and fees.

Some brokers work closely with a chosen few banks and lenders, such as HSBC or Natwest, which can mean that the interest rates and Maltese mortgage offers you see aren’t necessarily the best on the market.

The brokers we work with are impartial, with access to a wide range of British and international lenders. This means they will only recommend a mortgage that suits your budget and preferences.

Finding the best property

Property prices can vary greatly depending on where you intend to buy in Malta. Popular seaside towns such as St Julians or Sliema, or towns near the capital of Valletta, will generally be more expensive than other areas.

Proportionately, if you’re buying a property as an investment or a holiday home, the rental yield in these areas will be greater. St Paul’s Bay is a popular area further up the coast due to its high population of British expats and pubs, restaurants, and tourist amenities.

Most of the time, when properties are bought and sold in Malta, they come fully furnished, which can save a lot. The place will normally be ready to move in or rent out right away.

Finding a Buy-Let property in Malta

Affordability for Buy to Lets in Malta is calculated quite differently to the UK.

Due to Malta’s popularity as a tourist destination, many investors let the property out as holiday lets during the summer and on longer-term lets in the winter.

Due to this seasonal cycle and the often irregularity of the income achieved, much greater emphasis is placed on the earned income rather than the rental yield. Most lenders require that the mortgage be affordable based on an applicant’s earned income without factoring in any rent achieved.

The summer months, though, can be extremely profitable for landlords. Because English is spoken natively on the island, thousands of parents send their children to the island for the summer from countries where English is not natively spoken to learn it.

There’s so much demand from the local language schools that they even pay local homeowners to rent their spare rooms to students.

If you were to rent out a three bedroom flat in the right area to one of the language schools you could quite easily achieve a rental yield of over €1,000 a week.

Speak to an expert

If you have questions about getting a mortgage for a property in Malta and want to speak to an expert for the right advice, call Online Mortgage Advisor today on 0330 818 7026 or make an enquiry.

Then sit back and let us do all the hard work finding the broker with the right expertise for your circumstances.  – We don’t charge a fee and there’s absolutely no obligation or marks on your credit rating.