Minister for Social Accommodation meets with first bank taking part in New Hope Guarantee scheme

Minister for Social Accommodation Roderick Galdes met with APS Bank, the first bank to confirm its participation in the New Hope Guarantee scheme. Through the scheme, announced recently, aids people who have had or have a serious illness or disability to become homeowners.

The agreement between the Housing Authority and the bank was signed during the meeting to enable the scheme to come into force.

Maltese banks require a life insurance policy to lend money to interested customers. Banks say that this is done to ensure customers peace of mind if a casualty arises. Indeed, the requirement of a life insurance policy ensures that families will not necessarily have to sell their home to repay a bank loan should the owner die prematurely.

And, this criterion brings sadness and frustration among those who have gone through medical complications or those with a disability and are therefore unable to get an adequate life insurance policy.

This scheme, while not an insurance policy in and of itself, will offer a safer alternative to banks so that the loan can be granted without increased risk on the beneficiary’s relatives. The Government will be assisting these individuals with a guarantee that will cover a maximum loan of €250,000 on property that will be used as a primary residence.

Funds will be used from Malta’s citizenship by investment scheme, better known as the cash-for-passports programme.

In Minister Galdes’ words, these people will not be left in the dark. They will be given new hope to make their dream of becoming homeowners come true.

“As the name suggests, the New Hope guarantee will give new hope to many people who to this day have lived in despair,” said Minister Galdes.

He argued that in recent years, “The Ministry for Social Accommodation, together with the Housing Authority, have pushed for a strong element of social innovation, but this would not have resulted in anything if we hadn’t found partners, including banks, who believe in this vision and share social consciousness”.

CEO of APS Bank Marcel Cassar said, “When we were asked by Minister Galdes and the Housing Authority CEO, Mr McKay, to collaborate with them on this project, our reply was a resounding ‘yes’.

“As a bank active in the home loan market, we are saddened by those cases where aspiring homeowners with a medical condition or history are unable to obtain a life insurance policy. And while we try to manage this risk as best as possible, there will still be situations where the gap is too big”.

“The New Hope: Guarantee Scheme fills that gap in a very flexible and practical way. We are very pleased to have worked efficiently with a great team from the Ministry and the Housing Authority to be where we are today. Because this is not simply a scheme about loans that come supported with a government guarantee – these are loans that change lives,” concluded Mr Cassar.

Housing Authority CEO Leonid McKay, who was also present at this meeting, explained:

“The effectiveness of the scheme is that it addresses a small group of people who for many people should be invisible. The vulnerability of these people is not necessarily linked to income but still prevents them from the property market. With such a scheme we are showing where the State should guide the market.”