Every year, it is estimated that around up to 40 people suffering from disabilities request an insurance company to acquire life insurance for the purpose of obtaining a home loan.1 However, there are instances where insurance companies may end up refusing said requests due to how excessive the applicant's medical bills can be. As a result, some people end up never obtaining a home loan due to the mandatory requirement of having a life insurance.
On 1st September 2021, the Prime Minister, and the Minister of Social Accommodation, in collaboration with the Commission for the Rights of Persons with Disability ("CRPD"), announced a scheme whereby people who are suffering from certain medical conditions and are not provided with life insurance, the Government will provide a bank guarantee instead of a life insurance.
The name of the newly launched scheme is 'New Hope Guarantee Scheme' and the raison d'etre of this scheme as explained, is to cater towards people with certain medical conditions2, who are deemed ineligible for life insurance from insurance companies or if guaranteed, are required to pay high premiums. At present, the ad hoc fund consists of 3 million euros to approve loans.
Who can apply for this scheme?
For one to be eligible for the scheme, the individual or couple applying must be eligible by satisfying any one of the following 3 requirements:
- If the application has been refused twice from two different insurance companies.
- If the application has been postponed/pending for 12 months or more.
- If a person has been given a premium quotation which is not affordable or in their price bracket.
What you need to apply for the scheme and how your application is determined
First and foremost, it is important that the applicant acquires a medical report from a medical doctor that specifies the applicant's medical condition. The application is to be submitted to the Housing Authority ("the Authority") and the Authority will then do the necessary checks and balances to determine whether the application is legitimate. If the Authority and the CRPD accept the application, a recommendation will be issued to the relevant bank for a guarantee.
Those who are eligible (the beneficiary) will then be asked to pay an annual sum of participation, it is to be added that the sum will be calculated and based on the market of the median prices of the relevant market and affordable.
What happens if the person who benefits from the scheme passes away?
If the person who succeeds in obtaining the loan passes away, the Government will intervene and continues to pay such loan for a period that does not extend twelve (12) months. After that period is exceeded, then the heirs have to determine what to do with the property.
One option is to sell the property, while another option is that the person who inherits the property, will have the loan transferred under his/ her name. If, the person inheriting the property does not afford to purchase the entire property, then an equity sharing agreement can be agreed to with Government of Malta.
2. Some of the medical conditions include Type 1 Diabetes and Dwarfism. More details on the types of medical conditions applicable are yet to be released.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.