When it comes to furnishing a property in Malta, many individuals wonder about the financial options available to them. One common question is whether a 10% deposit is necessary when taking a loan from a bank specifically for furnishing purposes. This blog article aims to offer some guidance to this aspect and provide insights into the process of securing such a loan in Malta.

The Nature of Loans for Furnishing

In Malta, banks offer various types of loans tailored for different needs, including furnishing a property. These loans are typically used to purchase furniture and essential household items, such as bedroom sets, kitchen appliances, and living room furnishings. Unlike home loans or mortgages, these furnishing loans are typically not secured against the property itself but rather tend fall under the category of personal loans (this will depend on the bank you decide to work with as well)

Deposit Requirements for Furnishing Loans

In general, when it comes to personal loans in Malta, including those taken for furnishing a property, the requirement for a deposit is not as rigid as it is for home mortgages. Typically, banks may not require a 10% deposit for loans specifically intended for furnishing. Instead, the bank's decision to grant the loan is often based on the applicant's creditworthiness, income stability, and repayment capability.

Factors Influencing Loan Approval

1. Credit Score: A good credit score can influence the approval of a furnishing loan. Banks are usually likely to lend to individuals with a history of responsible credit use (such as not having defaulted any owed payments, what you spend your money on, and so on).
2. Income and Employment: Steady full-time employment (along with the consideration of any part-time employment) and a reliable income source reassure the bank of the applicant’s ability to repay the loan.
3. Existing Debt: Banks consider your current financial obligations. High levels of existing debt may impact the bank’s decision.
4. Loan Amount: The total cost of the furnishings and the amount needed may also affect whether a deposit is required.

Alternatives and Considerations

While a deposit may not be mandatory, it's always advisable to check with various banks and financial institutions, as policies may vary. Some banks might offer attractive interest rates or flexible terms that can make the loan more accessible without the need for a substantial deposit.

Exploring Other Financing Options

• Hire Purchase Agreements: Some furniture retailers in Malta offer hire purchase agreements, allowing you to pay for furnishings over time without a significant upfront cost.
• Personal Savings: If possible, using personal savings can reduce the need for borrowing and the associated interest costs.
• Credit Cards: For smaller purchases, using a credit card with a manageable interest rate might be a convenient option, though caution is advised to avoid accumulating high-interest debt. In our opinion, this should be used as a last resort.

Final Thoughts

While a 10% deposit is generally not required for loans specifically for furnishing, it is crucial to understand the terms and conditions of the loan agreement. Always consider your financial situation, explore different financing options, and select the one that best suits your needs and budget.