The Mediterranean sun, immersive culture and relaxed vibe of Malta appeals to many British property investors.
Restrictions on foreigners owning property became much more relaxed after Malta joined the EU in 2004 and most Maltese nationals speak both their native language as well as 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 can be hesitant about the mortgage process in Malta. And many have approached us asking whether it is possible or not 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, it can be pretty straightforward.
To give you all the information you need, we’ve created this guide with lots of helpful tips including where you can turn to for advice.
To save you from sourcing and comparing multiple lenders and their criteria, they can research the market for you and then recommend the ones that are 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 which is 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%, although in exceptional circumstances, you may be able to borrow up to 90% of the property’s value.
Of course, every lender is different. In fact, many borrowers are unaware that even if they are rejected by one lender, they may still be approved by another.
For more information on how much you could borrow with a mortgage for a property in Malta speak to an advisor.
How long is a mortgage in Malta?
Unlike the UK, the maximum repayment period of a mortgage in Malta is usually 30 or 40 years.
Be aware that Maltese mortgage lenders do not often provide the option for 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 any nasty mortgage rejections on your credit file, work with an international mortgage expert who can guide you through the process.
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 the process of 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 at a much lower cost than the market value, you may need to negotiate the price of the property with the seller or find financing for the additional funds needed to make the sale go through.
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 the UK. For this reason if you’ve had health issues then obtaining a mortgage from a Maltese lender may be difficult.
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 mortgage has been approved by the lender.
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 being said, there may be lenders in the UK that may, in the right circumstances, be able to 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 with prevent them from getting a mortgage in Malta, especially if they gave already been rejected by a lender.
An advantage for buyers with bad credit is that Malta does not have credit scoring. 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, so 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.
If you would like to do this, you will need to check whether your property meets the requirements needed for a rental permit and if they do, you will need to apply for one.
Furthermore, any income earned through renting will be subject to Maltese income tax, of which there are three tiers: 10%, 15% and 25%.
Should I use an online tool to calculate my mortgage in Malta?
Lots of borrowers use mortgage calculators to work out how much their mortgage in Malta will be.
And although online mortgage calculators can provide a quick estimate, they can provide inaccurate estimations.
This is because an online calculator can’t take all factors that may affect your mortgage into consideration.
In fact, lots of people come to us after having used an online calculator, feeling confused after receiving different quotes from different calculators.
To truly understand how much you can borrow as well as how much your mortgage payments will be, you need to speak to a specialist, who has real experience in Maltese property and mortgages.
Get the best advice from a whole-of-market broker
Many mortgage brokers claim to be whole of market, when in reality, their experience is limited.
Here at OMA, we will only put you in touch with professionals who have experience with negotiating and handling mortgages similar to yours.
We know how important accurate advice is and to prevent misinformation, we carefully vet every broker before deciding to work with them.
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 completely impartial, with access to a wide range of British and international lenders. This means that they will only recommend a mortgage that suits your budget and preferences.
Finding the best property
Property prices can vary greatly depending on where in Malta you intend to buy. 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 you’ll find that the rental yield in these areas is greater. A popular area is also further up the coast in St Paul’s Bay due to its high population of British Expats as well as 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 and the place will normally be ready to move in or rent out right away.
Finding a Buy to Let property in Malta
Affordability for Buy to Lets in Malta is calculated quite differently to the UK.
Due to Malta being a popular tourist destination, a lot of 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 often irregularity of the achieved income much greater emphasis is placed on the earned income rather than the rental yield, with most lenders requiring that the mortgage is affordable on an applicant’s earned income without factoring in any rent achieved.
The summer months, though, can be extremely profitable for landlords. Due to English being spoken natively there are thousands of parents who send their children to the island for the summer from countries where English is not natively spoken, to learn it.
There’s so much of a demand from the local language schools that they are even paying local homeowners to rent out 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 0800 304 7880 or make an enquiry here.
Then sit back and let us do all the hard work in 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.
*Based on our research, the content contained in this article is accurate as of most recent time of writing. Lender criteria and policies change regularly so speak to one of the advisors we work with to confirm the most accurate up to date information. The info on the site is not tailored advice to each individual reader, and as such does not constitute financial advice. All advisors working with us are fully qualified to provide mortgage advice and work only for firms who are authorised and regulated by the Financial Conduct Authority. They will offer any advice specific to you and your needs. Some types of buy to let mortgages are not regulated by the FCA.Think carefully before securing other debts against your home. As a mortgage is secured against your home, it may be repossessed if you do not keep up with repayments on your mortgage. Equity released from your home will also be secured against it.
Pete, an expert in all things mortgages, cut his teeth right in the middle of the credit crunch. With plenty of people needing help and few mortgage providers lending, Pete found great success in going the extra mile to find mortgages for people whom many others considered lost causes.
The experience he gained, coupled with his love of helping people reach their goals, led him to establish Online Mortgage Advisor, with one clear vision – to help as many customers as possible get the right advice, regardless of need or background.
Pete's presence in the industry as the 'go-to' for specialist finance continues to grow, and he is regularly cited in and writes for both local and national press, as well as trade publications, with a regular column in Mortgage Introducer and being the exclusive mortgage expert for LOVEMoney. Pete also writes for OMA of course!
Read more about Pete here...
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