Updated 1.40pm

People ineligible for life insurance due to certain health conditions are to be offered government help to allow them to get a home loan. 

Prime Minister Robert Abela and  Social Accommodation Minister Roderick Galdes announced the €3 million “New Hope” scheme which will use funds from Malta’s cash-for-passports program to cover up to €30 million worth of home loans.  

The scheme will be run by the Housing Authority.

Around 40 people every year are refused a home loan because they are unable to obtain life insurance cover. The number of people affected by the situation is likely to be higher, as many may not even try and apply for a loan.

What problem does this solve?

People who either live with a health condition or have suffered from severe illnesses in the past often find it almost impossible to obtain life insurance policies, with underwriters considering them too high-risk to insure. 

In other cases, such people are offered an insurance policy at extremely onerous rates which are 300% or more higher than normal rates.

A life insurance policy is a prerequisite for a home loan, meaning these people are often locked out of the property market and unable to become homeowners. 

Some of these people have been free of cancer for many years and others lead completely normal lives, despite their conditions. However, they are still turned down by insurance companies.

Abela said he had been shocked when he first heard the story of those unable to get a foot on the property ladder despite having overcome a serious illness or managed to cope with disability. 

"Can you imagine, having overcome such a hurdle, and then to face doors being closed in your face?" Abela asked. 

How will the scheme work?

To make up for this, the state will step in as a guarantor for the applicant and provide guarantees to banks to allow them to provide insurance coverage.

The guarantee will cover home loans of up to €250,000 for properties which are intended as the person’s primary residence.

To be eligible, a person must have been refused coverage by two local insurance providers, had coverage postponed by 12 months or more, or offered insurance against a premium that is considered unaffordable.

Paperwork to weed out abusers

Applicants will need to present medical paperwork to the Housing Authority, which will liaise with the Commission for the Rights of People with Disability (CRPD)and other competent authorities. 

Much like with insurance coverage, those participating in the scheme will still have to pay an annual or monthly fee. 

“A new hope, that is what this scheme is all about. This government does not ignore anyone’s reality, and we are here for everyone,” Abela said.    

Galdes on his part said the scheme would tear down a wall facing those trying to build their own nest.