In Malta, bank loans are commonly used for property purchases, and they are closely intertwined with the property purchase contract, which is typically formalized through a Notary Public. Here's a breakdown of how bank loans and property purchase contracts work together:

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1.    Bank Loans for Property Purchases in Malta:

• Loan Approval: To purchase property, most buyers will approach a bank for a loan. The bank will assess the buyer’s financial situation, creditworthiness, and the value of the property being purchased to determine the loan amount and conditions.

• Loan Types: Banks offer different types of loans, such as fixed-rate or variable-rate loans, with repayment periods generally ranging from 15 to 30 years.

• Down Payment: The buyer is typically required to provide a down payment (usually around 10% of the property’s value), while the bank finances the rest of the purchase price.

• Security: The property being purchased serves as security for the bank loan. If the buyer fails to repay, the bank has the right to foreclose on the property to recover the loan amount.

 

2.    The Role of the Notary Public:

• Contract of Sale: The property purchase in Malta must be formalized through a Notarial Deed of Sale, which is prepared and executed by a Notary Public. The Notary ensures that the transaction is legal, binding, and properly recorded.

• Verification of Loan: If the buyer is using a bank loan to finance the purchase, the Notary will ensure that the loan agreement is properly incorporated into the sale contract. This includes verifying that the loan amount and terms are clearly stated and understood by all parties involved.

• Bank’s Involvement: The bank requires a copy of the signed purchase contract, and the Notary coordinates with the bank to ensure that the loan is properly registered. The Notary ensures that the loan is recorded in the Public Registry to guarantee the bank’s interest in the property.

• Disbursement of Funds: After the signing of the deed of sale, the Notary will instruct the bank to disburse the loan amount to the seller.

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3.    Important Steps in the Process:

• Pre-Contract Stage: Before the deed is signed, the Notary ensures that all documents are in order, including the bank loan sanction letter. They may also conduct due diligence on the property (e.g., checking for legal encumbrances or other liabilities).

• Signing the Deed: On the day of signing, the buyer, seller, bank and Notary meet to execute the contract. The bank will provide the loan amount to complete the transaction.

• Loan Registration: The Notary will also handle the registration of the loan in the public registry, securing the bank’s right over the property as collateral for the loan.

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4.    Legal Protections:

• Security for the Bank: The loan is secured by the property, and the Notary ensures that the bank’s interests are legally protected by registering the loan.

• Buyer's Legal Protection: The Notary also safeguards the buyer’s rights, ensuring that the transaction is fair, transparent, and complies with all legal requirements.

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In summary, when a buyer in Malta is securing a bank loan for a property purchase, the Notary Public plays a central role in ensuring that both the sale and the loan are legally executed, with proper documentation and registration. This ensures that the buyer, seller, and bank are all protected in the transaction.
 

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