The Central Bank on Tuesday explained the conditions of a six-month loan repayments moratorium that has been introduced by legal notice.
Credit and financial institutions licensed by the Malta Financial Services Authority have been directed to offer a six-month moratorium on repayments on capital and interest for borrowers who have been negatively affected by COVID-19.
The moratorium applies to credit facilities sanctioned prior to March 1, 2020 – whether to individuals, households or businesses – and who can show that they have been negatively affected by the pandemic.
Applications by borrowers are to be made with their respective credit or financial institution until June 30. The six-month moratorium period will start with effect from the date of approval of the application.
"A moratorium is a temporary suspension of a borrower’s repayment obligations. Therefore, borrowers eligible for this moratorium will be permitted to postpone capital and/or interest repayments to a later date – without any penalties or restructuring/administrative fees," the bank said.
· The moratorium is not granted automatically, and the borrower will need to apply to the respective credit or financial institution. The moratorium comes into effect once the application has been approved. Borrowers have until 30 June 2020 to apply. Borrows who have already taken up a moratorium offered by their lender, but feel that the terms under the new directive are more advantageous, can renegotiate the terms subject to agreement with the credit or financial institution.
· Credit and financial institutions have the right to refuse applications as long as this is done within the terms of the new directive. Borrowers who were in arrears prior to 1 March 2020 are not eligible for the moratorium.
· Borrowers can apply to forego payments of both capital and interest completely for six months, and can also opt to continue to pay the interest but not the capital.
· The payments missed during the moratorium will be paid during a six-month extension to the term of the credit facility. If the credit facility was due to mature at retirement age, the missed payments would be spread evenly throughout the remaining term of the credit facility after the end of the moratorium period.
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