Creating Your BUDGET +
Getting Your Finances in Order
(These are the thoughts of CapitIL Real Estate Agency Sales Director Ben Levene.)
In the market today, getting your budget right is very important for a few different reasons.
Firstly, it is very important to know how much money you can spend. I stress to my clients who are either people without unlimited money, who are not bringing the money from America, or who are not buying in cash that unless you are very comfortable with your finances and know that you can raise the money, getting a mortgage in principle approved gives you the ability to know what you can spend and work out your budget.
Remember, most of the time the closing costs (taxes, agency fees, lawyers etc...) of 12.5 percent plus cannot be added to the mortgage and must be funded differently.
No one wants to see properties that are 10 million shekel if you can only afford 7 million. It is not fair on you and there is no need to go through the emotional process of finding exactly what you are looking for, but not being able to stretch the money.
We strongly advise looking at your mortgages at the time you start looking to buy. What does this process look like?
Firstly, speak to friends and family who have finances in Israel and ask them how they bought their house. Did they take the money from the States?
Did they take an Israeli mortgage? If they took an Israeli mortgage, how did they do it?
As a disclaimer, everything written here is to provide you with conceptual information, and should not be taken as professional advice.
Your broker, banks, and lawyers will give you all the information you need.
The first step is to get a preapproval for a mortgage. This means that the bank is willing to give you a loan subject to the property being able to be loaned on.
Two main ways that you can take Israeli mortgages are one, go straight to the bank, and two, use a mortgage broker. Going to the bank is not something that I suggest and most of my clients do not do this either.
That is generally because there is no rate sheet at the bank, meaning the bank decides depending on the day and it is extremely likely to be very expensive.
Your second option, using a broker, is something I highly suggest. I can recommend great mortgage brokers or you can get recommendations of brokers from friends, and you should speak to them and try them out.
The broker's role is to go to different banks and negotiate on your behalf. They charge a fee for this, however, they will normally be able to show you clearly how they are saving you money with lower payments in your repayments.
They will explain the different options for financing to you in terms of linked to the prime interest rate, linked to inflation, fixing the rate, and taking in a different currency.
They will guide you through this whole process and make it as simple as possible. The main goal of the broker is to take control of the mortgage, get all your documents together, and get you the best mortgage rate possible.
In conclusion, getting your finances in order is a massive benefit- it will make you more comfortable and it will allow you to only look at achievable properties.
I can tell you based on significant experience that it is always hard when clients find properties they love and either decide to stretch for it, which is not something that I advise buyers to do, or they do not stretch their budget, and just end up falling in love with the apartment, but not being able to buy it.
That is why I recommend figuring out your finances early so that you know exactly what you can afford, what you can borrow, and what you can buy.