Good news is that from Thursday, 4 June 2020, this age group of first-time buyers can apply for a government loan of up to €17,500 in light of covering or aiding in the usual 10% deposit usually asked for as a down payment when buying a property.
The total amount planned for under this scheme is €3 million as declared in the October budget. Those given the green light will have to pay it back over a period of 25 years.
The Minister of Social Accommodation, Roderick Galdes, said this scheme will now help younger people when going to a bank to request a loan for their first property of choice.
As banks usually calculate the 10% deposit against the total value of the property, this scheme’s aim is to spur on more people to buy a property rather than rent, as the government is also guarantor of the interest on the loan.
According to the maths, first time-buyers’ average spend was around €175,000 per property and this price was set as the ideal maximum not to exceed when applying for this loan.
Extensive research was conducted in order to ascertain the 10% figure ideal for the loan scheme and a purchase price of €175,000 was found to be the median for people who could not come up with a deposit. Those who purchase more expensive properties were therefore not the ones who were going to apply for this specific government loan.
Two of the country’s major banks, BOV and APS are partaking in this scheme to welcome potential new first-time homeowners and Finance Minister Edward Scicluna remarked that “no government or policy maker can ignore housing”.
Frank Salt Real Estate cannot agree more with this, as it is an important fact that the sooner people get on the property ladder, the bigger their chances are of securing a stable investment that will grow and outperform many other investment sectors. With historically low interest rates, it is very likely that paying back the interest on a home loan will be cheaper that renting, however buying a property and getting a justified return must always be seen as a long-term investment and serious commitment.