A scheme launched by the government last month to allow people with certain medical conditions to access home loans was one of the most challenging Social Accommodation Minister Roderick Galdes has had to work on.
Life insurance is a prerequisite for getting a home loan to buy a property in Malta, and while this is mostly a formality for most people, it is a totally different ball game for those living with certain medical conditions, who are denied life insurance as a result.
Lovin Malta sat down with Galdes to discuss a scheme that he has described as one of the most challenging he has ever had to work on.
“The difficulty of this scheme wasn’t creating it, but planning for all the eventualities that could occur in the future,” Galdes said.
“We had endless discussions about what happens if the person becomes sick again or if they die, how the guarantee will work… we had many people telling us at the start that this was a no-go area.”
Having looked into the matter, Galdes said it was clear that the issue was a market failure.
While one couldn’t blame the banks for wanting to protect their interests, the reality was that many of those being refused life insurance were more than capable of making their own way in life.
“I met people who have succeeded in life, professionals like lawyers, or CEOs, who have a good income but can’t become homeowners because they can’t get a loan,” Galdes said.
“In a situation like this, it’s the government’s job to do something. These people aren’t asking for special treatment, just for the government to step in should something happen. We’ve invested a lot in these people to overcome their condition and it doesn’t make sense for them to be held back because of stigma.”
The scheme will see an initial €3 million transferred into a fund administered by the Housing Authority, which will be able to guarantee up to €30 million worth of home loans.
Galdes said that the government was very careful not to distort the market. “In the ideal world this would have been done by the insurance companies, but we didn’t want to risk ending up with a situation where we see a nationwide increase in insurance premiums.”
The new scheme will see people with non-life-threatening conditions, such as blindness or dwarfism, be able to apply for a loan they previously would not have been able to access.
Galdes said the reason that people with these conditions were considered to be not fit for life insurance was that in many cases, the decision was based on outdated statistics, which weren’t even from Malta.
“We were using data from the UK from 1992, for example. Luckily, through this scheme, we will now have data about these conditions,” Galdes said.
He said that as part of the consultation process for the scheme, he had met with several medical professionals in order to get a better understanding of the risks associated with each condition.
“Medicine has come a long way since many of these lists were drawn up. You have conditions which might have been deadly in the past but which you can live a totally normal life with today,” Galdes said.
He said he hoped that the scheme would grow and would eventually be able to incorporate more conditions.
“I’m proud of the fact that we’re moving things and now that we’ve done it once, we can definitely do it again in order to help realise the dreams of people out there,” Galdes said.
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