Home loans to be guaranteed by government for people with disabilities, medical conditions

Struggling to purchase life insurance? The government will guarantee your home loan under a new scheme

A government scheme will guarantee life insurance coverage for people denied such coverage when trying to take out a home loan
A government scheme will guarantee life insurance coverage for people denied such coverage when trying to take out a home loan

A new scheme will see the government guarantee loans for people struggling to secure affordable life insurance.

This scheme is targeted at those who are either denied life insurance or are forced to pay a high premium on their insurance due to a disability or medical condition, either past or present.

“Government couldn’t remain silent in the face of these situations,” Prime Minister Robert Abela said during the scheme’s launch at Castille on Wednesday. 

The PM was referring to a person he had met months prior, who fell sick with a serious illness but, despite recovering and enjoying a stable job, couldn’t buy a residence because no one wanted to offer life insurance and guarantee the loan needed.

“Despite facing her illness with courage, she continued facing the consequences,” he continued.

Minister for Social Accommodation Roderick Galdes shared a similar sentiment. “The past doesn’t guarantee the future […], but for many people, this phrase isn’t true. For many people, the past guarantees the future in that it prejudices it.”

He added that this scheme adopts a model that will give peace of mind to banks and prospective home-buyers.

The scheme is being made possible through the National Social and Development Fund, enjoying a €3 million financing arrangement through the fund.

To be eligible for the scheme, one must first try and purchase an insurance policy from a private company, as is usually the case when someone tries securing a loan from a commercial bank. 

If that person’s application is refused, postponed by 12 months, or estimated to cost twice and a half more than the average price due to medical or disability reasons, then they will be eligible for this scheme.

In this case, that person must fill in an application and submit the relevant documentation to the Housing Authority and to the Commission for the Rights of People with Disability (CRPD).

Both entities will process the application together and eventually issue a certificate and letter of recommendation to the participating banks so they will be able to finalise the loan agreement for the applicant. 

The guarantee issued by the Housing Authority will cover a maximum €250,000 loan from any bank participating in the scheme. However, if the applicant is able to secure another form of guarantee over and above that offered by the Housing Authority, the bank would be free to offer a higher loan amount.

The beneficiary will be asked to pay an annual participation fee to cover the costs of the scheme. This fee will be based on the median premium on life insurance policies.