by Josh Ben-David
Israel’s mortgage industry can be very difficult to navigate. With over 30 loan products available, ranging from low rates and high risk to higher rates and no risk, securing a mortgage tailor-fitted to the borrower’s needs can translate into a savings of tens – if not hundreds – of thousands of shekels over the life of the loan.
The following are 3 reasons why you should consider seeking help from a mortgage consultant:
1. Objective and independent advice
In Israel, no single bank carries every mortgage product and some banks are more competitive than others on specific products. Interest rates on mortgage products also vary between banks, and even between different branches of the same bank! Each bank has unique terms and conditions, and there are several banks with hidden fees that can increase your effective interest rate without you ever knowing.
Your bank representative will avoid mentioning to you these details at all cost because he or she represents the interests of the bank. Only an independent mortgage professional can give you objective advice based on your personal needs.
2. Full service
For many people, getting approved for a mortgage in Israel is achievable. It all boils down to convincing the bank that you will make your monthly payments on time. Therefore, providing the right documentation and negotiating with the banks plays a key role in securing home financing.
The general rule is that banks offer better rates to lower risk borrowers, so presenting a good “case” or file to the bank means your payments will be lower. In addition to negotiating with the banks, the borrower must get an official appraisal of the property, run a title check, and collect the necessary documentation from the Israel Lands Authority (for refinancing, the process is a little easier but most issues listed here are still applicable). A good mortgage broker will take care of all this for you in a timely manner, allowing you to focus on preparing to move into your new home.
3. Financial savings
Since the law stipulates that banks cannot pay mortgage consultants directly for their services (which ensures transparency for the borrower), the banks offer mortgage consultants preferred rates which they then pass on to their clients. A good mortgage consultant can also get less-qualified borrowers approved and secure higher than normal loan-to-value financing which makes home ownership more attainable.
But lower rates and better terms are only part of the bigger picture. The most important aspect of mortgage consulting is knowing how to structure the loan in order to reduce risk and increase financial savings for the borrower. A correctly structured mortgage will allow you to pay less money to the bank and keep more money in your pocket.