Saving Up for Your Deposit to Buy

It’s common knowledge that, before you buy a house, you need to save up for your 10 per cent deposit. But how easy is it, and is anything stopping you from reaching your final goal?

Whether you’re a first-time buyer or looking to buy your second home, saving up for your initial deposit – which, in Malta, is a minimum of 10 per cent – is usually one of the hardest parts. That, of course, comes as no surprise as a property worth €250,000 would require the buyers to put together €25,000 – and that’s excluding the money needed for notaries, architects, and the whole shebang.

The bank requires a minimum of a 10% deposit as a criteria as they tend to on average shell out 90% as a mortgage for locals and 80% for foreign buyers, meaning that the deposit required maybe 20%.  This all depends on a number of items, which remains at the discretion of the bank you may utilise thus speaking to a them first is key so you can understand exactly what you need to secure a loan for your property in Malta.

On average, individuals take up to eight years to save up enough money for their deposit – which, if we’re sticking to the €250,000 property-example, would mean an average of just over €3,000 set aside per year. That may not seem like a lot, but it’s becoming harder year upon year as the cost of living in Malta – particularly rent – keeps going up.

It is for this reason that many people are turning to family members – usually their mothers and fathers – for help. Yet that is also bringing into the fray a whole new set of legal implications, particularly as most homes in Malta are still purchased by couples. The questions here can be incredibly tedious to answer: What happens if the couple breaks up? How will couples already paying rent and a bank loan afford to repay their parents for what has been lent?

Of course, the only other option here is to save more money over a longer period of time, and to continue living with your parents well into your late 20s or early 30s to save even more money on rent, bills and other expenses. Moreover, being part of a couple purchasing a property together means that the amount needed to purchase a home is halved for each individual. 

Over the past couple of years, the Malta Government has also set up a number of schemes to help people looking to buy a home. First-time buyers, for example, get a stamp duty exemption on properties worth up to €150,000 (extended for the third year in a row); while second-time buyers who are looking to upgrade their home (from a one-bedroom apartment to a three-bedroom apartment, for example) or those looking to downgrade can benefit from a stamp duty refund of up to €3,000 (while homeowners with disabilities get up to €5,000).

The truth is that saving up for your deposit isn’t easy but there are many avenues to take… What’s important to keep in mind, however, is that it’s all made worthwhile when you finally sign the deed on your dream home!