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Helping you make your dream home ownership a reality
07 Mar 2022
Buying your first home is an exciting time, but it can be a stressful and daunting process. The property market in Malta has been an attractive investment for a number of years and the market continues to grow.

Whether it is grants for first-time buyers on qualifying properties or stamp duty exemptions, the government currently has a number of initiatives to support this important sector of the economy, with particular emphasis on the first-time buyer.

For many young people in particular, becoming independent and having your own space could be considered part of growing up. Anecdotal evidence suggests the young would probably rank home ownership as a higher priority or life goal than having children or getting married.

However, home ownership can seem a distant aspiration for their generation as they face the challenges of rising pro­perty prices and unfavourable supply and demand dynamics in the housing market.

According to our research, a typical first-time home buyer, opting for a 90 per cent mortgage, tends to be in their early 30s. While for couples the average age tends to be a little lower at 28 years. With this in mind, the home ownership dream does not have to be so distant.

The option of paying the interest only for a limited period of years on a home loan could be an attractive proposition, especially in the early years. How does this benefit the borrower?

The majority of first-time buyers tend to be younger people in the early stages of their careers. So, their full income potential will be realised over time. In this instance, the interest-only option can be an ideal solution. As it allows homebuyers flexibility in terms of lower repayments and frees up cash which they can choose to spend on finishing their new home, or other investments.

If you are a more brave individual you could invest the extra cash, and if your investments perform well and make a profit you may save enough money to pay your mortgage off early. But clearly this would be a risky strategy. Of course, as a caveat to this, with a lower initial repayment, you need to have the confidence to be able to deal with higher payments in the future.

For many years, the interest-only option has been an attractive finance solution for homebuyers. The option of limit­ing the interest-free period for a number of years can help with discipline when it comes to affordability, as you remain focused on higher future repayments. Nevertheless, for many young people who are taking the first step on the property ladder the benefits of opting for an interest-only loan can outweigh the costs.

This article was written by Dipak Chouhan, Head, at Business Generation Retail Banking and published on the Sunday Times of Malta on 6th March 2022. 

This article is not and should not be construed as an offer or recom­­mendation to sell or solici­tation of an offer to purchase or subscribe for any mortgage or other consumer finance product. The author and Bank of Valletta plc have obtained the information contained in this document from sources they believe to be reliable but they have not independently verified the information contained herein and therefore its accuracy cannot be guaranteed. 
The author and Bank of Valletta make no guarantees, representations or warranties and accept no responsibility or liability as to the accuracy or completeness of the information contained in this document. They have no obligation to update, modify or amend this article or to otherwise notify a reader thereof in the event that any matter stated therein, or any opinion, projection, forecast or estimate set for the herein changes or subsequently becomes inaccurate. Furthermore, past performance is not necessarily indicative of future results. The value of investments may go down as well as up and may be affected by changes in currency exchange rates.

Mortgages are subject to normal bank lending criteria, the final approval of the bank and loans cannot exceed the retirement age of the borrower. 

Terms and conditions are available from www.bov.com. Issued by Bank of Valletta plc. Bank of Valletta plc is a public limited company regulated by the Malta Financial Services Authority and is licensed to carry out the business of banking and investment services in terms of the Banking Act (Cap.371 of the Laws of Malta) and the Investment Services Act (Cap.370 of the Laws of Malta).
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Bank of Valletta p.l.c. is a public limited company regulated by the MFSA and is licensed to carry out the business of banking and investment services in terms of the Banking Act (Cap. 371 of the Laws of Malta) and the Investment Services Act (Cap.370. of the Laws of Malta).