Buying a property in Malta is a fairly straightforward process that can be completed in a few simple steps. This guide will inform you about the exact steps you need to take when you buy a property in Malta:
Check with a Local Bank about Financing
The first thing you should do is check with a local bank to determine the authorised loan amount that you can obtain. If you find terms that are agreeable to you and the bank gives you the go-ahead, you can begin your search. Should you be a cash buyer, you can naturally skip this step.
Find a Property in Malta
The Maltese property market always has plenty of different kinds of property on offer. The biggest challenge you’ll have is finding something you really want based on the authorised loan amount the bank has chosen to lend you. When you find something you like, make the seller an offer, and if the offer is accepted, you’ll want to sign a Promise of Sale agreement (more about that later) in the presence of a notary.
For more guidance, read our article about questions you should ask when buying a property in Malta.
Find a Notary in Malta
There are many reputable notaries in Malta that would be more than happy to assist you with the purchasing process. You need to visit a notary to define the terms of the agreement you will enter into with the seller, such as the length of the Promise of Sale and subject to bank finance on the property.
Promise of Sale Agreement
A Promise of Sale agreement is an agreement signed between the buyer and seller that is designed to protect both parties in the transaction – the buyer is protected because the seller is bound to sell the property only to them, whereas the seller is protected because the buyer is bound to not back out of the transaction.
The minimum term for a Promise of Sale agreement is three to four months. One of the key terms in this agreement, if applicable to your particular case, is that the sale is subject to you obtaining a bank loan.
It normally takes a bank a minimum of eight weeks to approve a loan and issue the associated sanction letter. A Promise of Sale agreement can be extended if both parties involved in the transaction agree to do so.
When signing a Promise of Sale agreement, you are required to pay a deposit of 10% of the value of the purchase price. This is usually payable by cheque, which is held by your notary of choice until you sign the final contract, or until the sanction letter is issued. Should the sale fall through for any reason at law, the deposit will be paid back directly to you.
You will also have to pay a notarial fee (which is set out by law) and administration expenses. This payment is usually made at the end of the purchase process. Bear in mind that when all is said and done, this expense can amount to a few thousand euros. Please refer to notarial fee guidelines for further information, however you can also check how much these fees would be on your property in Malta.
The Promise of Sale is signed. Now what?
During the period that the Promise of Sale of agreement is in force, your notary will conduct searches on the property. These searches are done to ensure that the current seller is actually authorised to sell it and there is no outstanding debt on it.
You should also seek to take out a life insurance policy to cover the value and contents of the property you’re about to buy. This is a requirement requested by the bank for purchasing a property in Malta, however the bank that you take out a loan with (if you are doing so) will usually have its own life insurance provider to recommend to you.
Although it isn’t absolutely necessary, it’s a very good idea to employ an architect to check the property over to ensure everything is built according to Planning Authority approved permits.
Bank Confirms Loan and Issues Sanction Letter
If all of the above goes smoothly, then your bank will notify you that it is issuing the loan for your property in Malta, together with a document containing the terms and conditions of the loan, which is known as a sanction letter.
When you have this letter in your possession, hand it to the notary to prepare for the final contract. This usually takes place in the presence of a legal representative of the bank issuing the loan (if you’re taking one out), the notary, the buyer, seller and real estate agent.
Congratulations! You’re a Homeowner
It’s now time to consider the interior and exterior spaces of your new property in Malta. Did you buy something furnished? Is it brand new and needs your own personal touch? Do any refurbishments need to be carried out?
You’ll also be looking at moving your possessions into the property. Depending on how much stuff you have, it might be worth thinking about which moving company you’re going to entrust!