Mqabba Development
- Location
- Mqabba, Malta
- Type
- House purchase, construction & finishing
- Components
- House purchase, construction, finishing works, furniture
Annual income
€125,000/yr
Financing Proposal
Mqabba & St. Julian's, Malta
Prepared for discussion with Bank of Valletta
Section 01
This is a proposal to finance two property investments in Malta: a house development in Mqabba comprising purchase, construction and finishing works, and the purchase of three separate semi-finished apartments at Lourdes Park, St. Julian's, which will be finished, furnished and let out.
Total financing requested is €2,645,000 across two loans, alongside owner equity contributions consistent with a standard 20% contribution / 80% financing structure. Combined, the two properties are projected to generate €240,000 in annual profit before tax (PBIT) against combined annual debt service of €176,140.
That produces a positive cash surplus from year one which grows as rental income steps up over time. The two income streams are complementary: the Mqabba loan is strongly self-servicing from day one and provides a buffer while the Lourdes Park apartments' income ramps up in its early years.
Section 02
Annual income
€125,000/yr
Annual income
~€115,000/yr
Section 03
| House | €800,000 |
|---|---|
| Construction | €50,000 |
| Finishing | €400,000 |
| FurnitureOwner contribution | €200,000 |
| 3 apartments (semi-finished) | €1,800,000 |
|---|---|
| Tax | €80,000 |
| Notary | €25,000 |
| Finishing | €50,000 |
| FurnitureOwner contribution | €150,000 |
Section 04
Financing follows Bank of Valletta's standard structure for this type of investment: 20% owner contribution, 80% bank financing.
20%
Owner Contribution
80%
Bank Financing
Section 05
Loan 1
€1,080,000
Loan 2
€1,565,000
Small early shortfall, closes as rental income steps up every 5 years.
Section 06
Full year-by-year interest, principal, and cash-flow position for both loans.
| Year | Interest | Principal | Payment | Balance | PBIT | Net (after int+tax) | Surplus/(Deficit) | Cumulative |
|---|---|---|---|---|---|---|---|---|
| 1 | €41,040 | €37,027 | €78,067 | €1,042,973 | €125,000 | €56,673 | €19,646 | €19,646 |
| 2 | €39,633 | €38,434 | €78,067 | €1,004,538 | €125,000 | €57,623 | €19,188 | €38,834 |
| 3 | €38,172 | €39,895 | €78,067 | €964,643 | €125,000 | €58,609 | €18,714 | €57,548 |
| 4 | €36,656 | €41,411 | €78,067 | €923,233 | €125,000 | €59,632 | €18,221 | €75,769 |
| 5 | €35,083 | €42,984 | €78,067 | €880,248 | €125,000 | €60,694 | €17,710 | €93,478 |
| 6 | €33,449 | €44,618 | €78,067 | €835,630 | €131,250 | €66,015 | €21,398 | €114,876 |
| 7 | €31,754 | €46,313 | €78,067 | €789,317 | €131,250 | €67,160 | €20,846 | €135,722 |
| 8 | €29,994 | €48,073 | €78,067 | €741,244 | €131,250 | €68,348 | €20,275 | €155,997 |
| 9 | €28,167 | €49,900 | €78,067 | €691,344 | €131,250 | €69,581 | €19,681 | €175,678 |
| 10 | €26,271 | €51,796 | €78,067 | €639,547 | €131,250 | €70,861 | €19,065 | €194,742 |
| 11 | €24,303 | €53,765 | €78,067 | €585,783 | €137,812 | €76,619 | €22,855 | €217,597 |
| 12 | €22,260 | €55,808 | €78,067 | €529,975 | €137,812 | €77,998 | €22,191 | €239,787 |
| 13 | €20,139 | €57,928 | €78,067 | €472,047 | €137,812 | €79,430 | €21,501 | €261,289 |
| 14 | €17,938 | €60,130 | €78,067 | €411,918 | €137,812 | €80,915 | €20,786 | €282,075 |
| 15 | €15,653 | €62,414 | €78,067 | €349,503 | €137,812 | €82,458 | €20,043 | €302,118 |
| 16 | €13,281 | €64,786 | €78,067 | €284,717 | €144,703 | €88,710 | €23,924 | €326,042 |
| 17 | €10,819 | €67,248 | €78,067 | €217,469 | €144,703 | €90,372 | €23,124 | €349,165 |
| 18 | €8,264 | €69,803 | €78,067 | €147,665 | €144,703 | €92,097 | €22,293 | €371,458 |
| 19 | €5,611 | €72,456 | €78,067 | €75,209 | €144,703 | €93,887 | €21,431 | €392,889 |
| 20 | €2,858 | €75,209 | €78,067 | €0 | €144,703 | €95,745 | €20,536 | €413,425 |
| Total | €481,346 | €1,080,000 | €1,561,346 | |||||
Section 07
Loan 1 carries the weight in the early years — its year-one surplus of €19,646 comfortably covers Loan 2's modest year-one shortfall of €1,119, producing a combined cushion of €18,526 in year one. This pattern holds throughout: Loan 1 generates a steadily growing surplus (reaching €413,425 cumulative over its 20-year life) that offsets Loan 2's modest recurring deficit, which averages roughly €758/year and never exceeds €3,138 in any single year, closing further each time rental income steps up.
| Loan | Principal | Term | Rate | Annual Payment | Monthly Payment |
|---|---|---|---|---|---|
| Loan 1 (Mqabba) | €1,080,000 | 20 years | 3.8% fixed | €78,067 | €6,506 |
| Loan 2 (Lourdes Park) | €1,565,000 | 25 years | 3.8% fixed | €98,072 | €8,173 |
| Combined | €2,645,000 | — | 3.8% fixed | €176,140 | €14,678 |
Section 08
On a combined basis the debt service coverage is healthy, with Loan 1 offsetting Loan 2's small early shortfall. If presented to the same lender, the blended picture should be shown together rather than assessed loan by loan. Next steps would be to finalize valuations, confirm the 20/80 contribution split, and agree drawdown scheduling for the finishing works on both properties.
Section 09
Items worth raising with the bank to strengthen the terms and close Lourdes Park's early-year gap.
These are discussion points to raise with the lender, not guaranteed terms — final structuring depends on the bank's credit policy.