Israeli Mortgages: The Basics
and Role of Mortgage Brokers
(These are the thoughts of CapitIL Real Estate Agency Sales Director Ben Levene.)
When looking at Israeli real estate, it is crucial that you understand a) your budget and b) how much you can borrow.
Before you start your property search, you must be mindful of how much you can realistically spend. If it is a cash purchase, then you are aware of what you can spend.
However, if you have a deposit of 1 million dollars, but you know you want to buy a property that is 180 SQM in Baka, then you know that will cost you 2.5-3 million dollars plus.
For this reason, you need to be aware of your budget and how much you are able to borrow.
Technically, you can walk straight into an Israeli bank and talk to them about mortgages and what their bank can offer you. However, they represent that individual bank and will offer you what their bank can offer without comparing the offers to other banks.
A good mortgage broker will negotiate multiple offers from multiple banks to ensure you get the best deal for your particular situation.
Talk to them, introduce yourself, and let them tell you what they do. Here is some information regarding mortgages and mortgage brokers that you should know.
Main Roles of Mortgage Brokers:
• Help with the process of prequalifying you quickly.
• Negotiate mortgage rates for you from the banks.
They should be able to show you how they can save you money in their fees over time with the mortgage rate that they negotiate for you.
• Explain different options for the mortgages.
1. They must be able to communicate easily with you in English.
2. They should be able to explain.
a. What currencies you are able to borrow in and the advantages and disadvantages of each option.
b. How you can take different parts to the mortgage (eg. fixed, variable and part linked). Mortgages in Israel can be blended.
What You Should Get Out Of Hiring a Good Broker
• Find out if you quallify and how much you can borrow.
• Get you the right mortgage for you (they should explain pros and cons so you can make informed decisions).
• Help you choose the right mortgage for your needs
Every case is individual because no two situations are the same as there are many different variables.
For example, if you are selling a house in America in 5 years, that means that you would rather pay back most of the mortgage in 5 years and that is something your broker can help negotiate.
You need a broker that understands all the nuances of your situation and knows how to negotiate a mortgage that suits you.
General Info About Mortgages in Israel: EACH CAN BE DIFFERENT
• Foreigners can generally borrow 50% of the appraised value of the property.
1. Discrimination by age.
2. Generally, the banks want the mortgage paid back by age 80.
3. Can be stretched by good brokers to 85-90 subject to individual approvals.
• As a general rule approval for mortgages are based on income here in Israel.
You should get professional advice from an experienced mortgage broker. Each case is individual, so do not base what you think your mortgage rate on what your friends received.
Pick a broker based on your research and get recommendations from your friends, family, attorney, or realtor for a good mortgage broker.
I am happy to connect you to mortgage brokers and I do not take referral fees.
Alternatively speak to friends or your lawyer for other recommendations. Different brokers are suitable for different clients, so be sure to check out any professional you work with.
This article is for basic general info on mortgages. It is not advice and should not be used to make mortgage decisions and you must do due diligence and speak to a mortgage expert to make informed decisions.