This general information sheet is issued by Banif Bank (Malta) plc (Reg. No: C 41030) with registered address at 203, Level 2, Rue D’ Argens, Gzira GZR1368, Malta.
This general information sheet applies to home loan agreements entered into after the Home Loan Regulations came into force in terms of Legal Notice 415 of 2011.
The purpose of a Home Loan
A Home Loan is provided by the Bank in order for a person to purchase, reconstruct, renovate, alter, or improve residential property or to refinance an existing Home Loan.
Types of Home Loans
A typical Home Loan is denominated in euro, repayable over a period of up to 50 years with a variable interest rate. The interest rate is quoted as a margin over the Bank’s base rate. The Bank’s base rate means the basis on which the rate of interest on all Bank lending is generally determined. The interest charged on variable rate home loans changes whenever there is a change in the Bank’s base rate. This implies that when the Bank’s base rate decreases the interest charged also decreases. On the other hand, if the Bank’s base rate increases the interest charged on the home loan also increases. The Bank may from time to time, at its sole and absolute discretion, change the Base Rate. The new Base Rate shall be published on the Bank’s website, at any of the Bank’s branches, and if deemed necessary by the Bank by means of a public advert. Such change in the Base Rate shall be immediately effective upon such notification. Notwithstanding the changes in the Bank’s base rate, the Bank may also change the margin in particular circumstances.
The Bank may also offer fixed rate Home Loans where the rate of interest would not change during the fixed rate period unless the customer is in breach of his/her obligations. The interest charged on fixed rate home loans does not fluctuate with changes in the Bank’s base rate as is the case with variable rate home loans.
The Bank may also offer Home Loans denominated in foreign currency such as USD and GBP. Foreign currency Home Loans pose an additional risk when compared to Home Loans denominated in the domestic currency, which is mainly exchange rate risk. All the conditions under which the Bank is prepared to lend will be contained in the credit agreement which is issued to the customer.
The Bank requires security on the property being financed in the form of a special hypothec and a special privilege in terms of Maltese law. The Bank will require a general hypothec on the customer’s present and future assets, a pledge on a life assurance policy which is acceptable to the Bank as well as a pledge on property insurance. In certain circumstances, the Bank will also require additional security, such as, for example, a personal guarantee by a third party or a pledge on a credit balance.
The cost of a typical Home Loan
There is no minimum or maximum amount of a Home Loan. Assuming a Home Loan of €150,000, repayable over 40 years and assuming a constant interest rate of 3.2%, the total amount which the customer would pay under the Home Loan is €267,995 (including capital and interest) plus the related costs described below. The Annual Percentage Rate applicable in this case is 3.3%, when taking into consideration that total bank fees applicable in this case amount to €1,025. All third party fees have not been taken into consideration in the calculation of the Annual Percentage Rate.
The costs associated with a Home Loan include the Bank’s processing fees and legal fees, fees for the post-deed updating of searches including Land Registry update fee (if applicable) and, fees for the conservation of the special privilege in cases of construction, completion, alteration or improvement of property, fees for the extension of the drawdown date, if an extension is requested by the customer, fees for periodic updating of searches, cancellation/waiver/postponement fees for cancellation/waiver/postponement of the hypothecary charges if cancellation is requested by the customer, as well as other fees payable to third parties such as notarial fees, public registry fees, land registry fees (if applicable), architect’s fees, life assurance and property insurance premium and a home loan closure fee. In case of non-compliance of the terms and conditions of the Home loan agreement, the Bank shall charge a fee for issuing a letter communicating such default. In addition, changes to the terms and conditions of the Home loan agreement shall incur a rescheduling fee.
The costs which are charged by the Bank are described in the Bank’s Tariff of Charges, which may be obtained from the Bank’s branches or from the Bank’s website. The Bank’s fees and charges may change from time to time. Third party fees referred to in this paragraph are not levied by the Bank directly but by the third party concerned. The Bank has no control over the amount of the fees payable to or charged by third parties.
The customer will repay his/her Home Loan in equal monthly instalments inclusive of interest over a pre-agreed period of time. For example, the repayments of an average Home Loan of €150,000 repayable over 40 years and at an interest rate of 3.2% would require the borrower to make 480 monthly repayments of €558.32 each inclusive of interest. Any additional payment the customer may make will be used to pay accrued interest first and is then applied to the capital.
Early repayments of the Home Loan together with all interest accrued up to the date of the repayment may be effected in whole or in part subject to the Borrower/s giving the Bank prior notification in writing as specified in the home loan agreement prior to the next instalment due date. When a partial early repayment is made, the monthly repayment amounts and any applicable costs may be adjusted in order to reflect such partial early repayment. In the event of a partial early repayment the term for the repayment of the Home Loan shall remain unaltered.
In case of any early repayment, no refund shall be given by the Bank of any one-time fees paid by the Borrower/s and referred to in the Home Loan Agreement such as processing and legal fees. Furthermore, in the event of a full early repayment by the Borrower/s, any amount discounted by the Bank on the processing fee or on any other fees granted by the Bank to the Borrower/s upon signing the Home Loan Agreement shall be paid to the Bank through the debiting of the Borrower/s current/savings account held with the Bank with an amount equivalent to the discount on the relevant fee/s.
Duration of the Home Loan agreement
The Home Loan Agreement shall terminate automatically when the Borrower/s repay the Home Loan in full including any accrued interest and costs.
Valuation of the property
A valuation of the property from a Bank appointed architect would be required.
Tax relief on Home Loan interest or public subsidies
Should the customer wish to obtain information on tax relief on Home Loan interest, if any, the customer should contact the Department of Inland Revenue. Should the customer require any information on the possibility of a public subsidy the customer should contact the Housing Authority.
Right of Withdrawal
Once the customer has signed the credit agreement to signify his/her acceptance of the Home Loan, the customer’s notary may make an appointment with the Bank for the publication of the deed. Once the customer has signed this deed he/she does not have a right to withdraw from it.
The customer may request the Bank for a quotation for a Home Loan. In addition, the terms and conditions which will
apply to a Home Loan will be contained in the home loan agreement and in the deed of loan, once signed.