You’ve been dreaming of getting on the property ladder and now your time has finally come. Buying your first property is something of a rite of passage – certainly it is an accomplishment to arrive at this stage. We’ve outlined the process of buying your first property below, to help first time buyers understand the process.
It’s really important to understand your budget as a first step. This is because your budget will determine the properties in your price range, and it’s useless to start searching before as you can end up disappointed. You can get a rough estimate of your budget through an online calculator. It is best practice to shop around and get details from several banks in order to find the right arrangement.
Keep in mind that you will usually need to put 10% of the property price down as a deposit. There are also other fees to consider, which could take a portion of your loan: notary fee, architect’s fee, stamp duty and possible legal fees. You will also need to purchase life insurance as one of the conditions of the loan.
Build a list
Once you have a budget in mind, you should sit down and set out what you want and what you need in a property. This is where working with an agent will start to pay off – your agent can guide you through determining what is really important. Think about what you need now and also what you may need in 5-10 years. Which locations are you interested in? What type of property will suit you? How many bedrooms do you need? Are there any essential features, such as a laundry room or pantry, that you really must have?
Armed with your requirements list, the property search begins. Your agent can show you properties online to get a better idea of your taste, and then once you’ve selected a couple of properties that really interest you, they will sort out the logistics and arrange viewings. The viewing process could take many months – it’s best to approach it as part of the adventure, enjoy it! Keep in mind health precautions and sanitise hands when entering a property. Give your agent feedback after each viewing, this will help them offer you better choices. Take your own photos of each property so you can view them again later and share them with loved ones for their opinion. Keep things organised with a spreadsheet detailing each property you visit, so that you won’t get confused later on.
You should end up with two or three strong contenders. If you’re having trouble narrowing it down, try doing the following. Visit the area at night and speak to neighbours to find out about noise levels, traffic issues, parking availability, and light pollution. When you think you’ve found the one, ask to see plans and have your architect pay a visit – the architect’s inspection will reveal if everything is according to building regulations. They can also provide a valuation of the property so you can get an idea of what kind of offer to make. Ask to see the latest utility bill and also the Energy Performance Certificate.
Make an Offer
When making an offer on a property, your agent will take care of the negotiation process in order to come to an agreement that suits both parties.
Promise of Sale
The agreement is put down formally in the promise of sale document. Both parties will meet up to sign this document prepared by the notary. At this point, the 10% deposit is left with the notary and 1% of the stamp duty is due. The notary will also perform searches to determine that the property is freely transferrable.
With the preliminary agreement sorted, the bank will issue a sanction letter confirming the bank loan, and you will need to take out life insurance as one of the conditions of the loan.
Around 3-6 months later, both parties will meet again to sign the final contract transferring property ownership from the seller to the buyer. The balance of the price is paid, and the notary’s fee is due together with the fee for the searches. This is when the balance of the stamp duty must also be paid.
Then – congratulations you’re a home owner!
You must transfer the utility billing account to your name, and register yourself as a resident at the property with ARMS. You should also update the address on your identification card.
Malta First Time Buyers’ Scheme
As a first-time buyer, you are entitled to a reduction of the stamp duty. Normally, stamp duty is charged at 5% of the selling price of a property. However, when purchasing your first property for residential purposes, there is no tax charged on the first €200,000 of the purchase price, and 5% on the balance.