Probability is that your home is the most expensive asset you will own during your lifetime. The decision to purchase a house should therefore be granted the necessary effort and time. This post will explain what steps need to be taken to make this process as smooth as possible.
When buying a property chances are that you need to take out a loan to cover all the costs. The bank loan usually covers the costs of buying the house, the cost of the house itself and the cost of completion of the house. You will usually be required to pay out of your savings 10% of the value of the house (including costs of purchase and the cost of completion), the other 90% is provided by the bank. The 90% is not any figure, this amount is usually capped based on what you can afford calculated on the basis of your monthly income. The monthly loan repayments as calculated by the bank will usually take up a percentage of your monthly income but gives you a leeway that allows for monthly expenses that will arise in the future. It is also important that you shop around so that you can ensure that the loan taken out is at the best rates available on the market.
Having an idea of what you have already gathered in savings and what is the amount that the bank is willing to lend you, you can now start looking for property that is within your budget and meets your desired criteria. Start narrowing your search criteria by deciding on the areas you would like to live in and the type of property you are looking for. Other determining factors may be the number of bedrooms and the square meters you want to aim for. Lion Malta provides you with an estimated cost per square meter for each locality. These figures are based on out listings and will give you a broad estimate of what to expect when looking for property in a specific locality.
When you find your ideal home you can negotiate the final price with the seller. After such price is agreed upon, the parties should sign the Preliminary Agreement (Konvenju). This agreemenet outlines the details of all the parties involved, an in depth description of the property, the agreed price, the validity period of the agreement and any other terms and conditions as agreed upon between the parties. It is important to note that the preliminary agreement is binding on both parties and not just the seller.
At the meeting to sign the preliminary agreement the parties must have documents ready to be presented to the notary (see Detailed list of documents required). Upon signing the preliminary agreement the buyer will be required to pay 1% in provisional stamp duty (out of the total of 5%) and a deposit of usually 10% of the value of the property. This deposit which is kept by the notary will be paid to the seller should the purchaser decide not to move forward with the final contract without any reasonable grounds.
During the time between the signing of the preliminary agreement and the signing of the final deed, the purchaser’s notary will do the necessary research on the property and verify legal title. The buyer will need to obtain the necessary documents as specified in the preliminary agreement and also finalise the loan agreement with the bank to make sure the money is available to the seller when the final deed is finalised. Likewise the seller will be required to complete his side of the deal in terms of the preliminary agreement.
When the final deed is then signed, the payment of the balance is paid to the seller, the balance of the stamp duty is paid to the Inland Revenue Department and the notary fees are settled. The ownership of the property is now transferred to your name and the seller will hand over to you all the keys. Within 15 days from the signing of the final deed the notary is responsible to register you as the owner of the property at the Land Registry and pay any taxes that were paid to him to the relevant authorities.