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The bank sanction letter is the document every prospective homeowner awaits with bated breath. The one that confirms whether or not the bank will extend them a loan on their selected property.

Today’s column by Marisa Said, who heads the Consumer and Microbusiness Finance Department at Bank of Valletta, kicks off a series of articles aimed at demystifying the world of credit.

Ms Said has over 30 years of experience in retail banking, most of which are directly related to mortgages, and is a key trainer in the area of home loans.

She explains:

Maria Said

A sanction letter, sometimes referred to as facility letter, is a document that confirms that a loan has been approved and is ready to be granted by the lender to the borrower. It is issued by a bank, or a financial institution, and it outlines the terms and conditions of the loan. It includes details such as the loan amount, interest rate, repayment term, and any associated fees or charges.

The sanction letter is typically issued after the lender has reviewed the borrower’s creditworthiness and financial standing and has determined that they meet the necessary criteria to take the loan. The letter may also include any specific conditions or requirements that the borrower must meet, such as providing collateral, additional documentation, or meeting certain performance milestones.

Once the borrower has reviewed and agreed to the terms and conditions of the sanction letter, they may be required to sign and return a copy of the letter to the lender as a formal acceptance of the loan offer and provide a copy of it to their Notary where a deed of loan is involved.

An Expert Explains is a initiative to improve economic financial literacy by inviting industry leaders to explain technical terms in a manner that can be understood by a general audience. If you would like to suggest a term or concept for our network of professionals to break down, or if you are an expert willing to contribute to this column, send us a message on our Facebook Page.

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