Central Bank eases conditions for borrowers looking at buying second home

Central Bank of Malta postpones stricter down payment measures for second home buyers until July 2021

Central Bank of Malta
Central Bank of Malta

The Central Bank of Malta has postponed measures which raise standards for individuals looking to take a loan for their second home.

Current directives specify that people looking to buy a second property through financing from credit institutions, have to make a minimum 15% down payment.

The percentage was due to increase to 25% as from July 1 2020, but now has been postponed to July 2021, in light of the negative impact by the COVID-19 pandemic.

“The Central Bank of Malta understands that the outbreak of COVID-19 has had a negative impact on the real estate market, with social distancing affecting the purchase process, causing disruptions in banking and notarial services, as well as putting pressure on households’ incomes and cash buffers,” the CBM said in a statement.

The bank has also eased restrictions on the maximum extent of the permitted repayment burden by borrowers for temporary period of time.

The extent was set at 40% of the applicant’s monthly income. The limit has been eased for six months.

The restrictions will be eased provided the borrower demonstrates that exceeding the limit will only be done for a short period.

The concession will be at the total discretion of the lender.

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