Mortgage Options in Israel
Real estates in Israel are not inexpensive. This is due to the fact that only about 7% of land in the country can be sold and bought without any restrictions. In addition, the majority of privately owned land is located in urban areas, in the first place centres of large cities. As a result, many Israeli citizens and new immigrants cannot afford themselves to buy a home without a mortgage or loan. Foreign non-residents are not eligible for mortgages in Israel.
You have to options if do not have a sum large enough to buy yourself a home – government loans and bank mortgages. Subsidized government loans are given according to a system of points which determines whether an individual is entitled to a government loan and at which terms. New immigrants, large families, and military and national service personnel for instance have automatically more points than an “ordinary“ citizen. Government loans used to offer more favourable terms but the things have changed dramatically over the last years and it is not impossible to get a better bank mortgage. For that reason it is worth to check all your options to see who is offering the best terms.
Unlike government loans which cannot be negotiated, banks are much more open to negotiations than many people are aware of. But before you start asking around, you should determine what kind of mortgage suits you most. There is not really much to think about because it is always a better to decide for principle only mortgage with a fixed interest rate. Variable interest rate has its advantages too but try to negotiate a fixed rate.
Negotiating with banks is not as difficult as it may seem. But before you get to the negotiation part, make a visit to as many banks as possible and ask them for their offer. When you gather the offers, take yourself some time to compare the offers of different banks and find the most favourable one. However, do not decide for any bank yet. Write down the offer of the bank that gave you the most favourable terms and visit the same banks you visited the first time. Tell them the best offer you have received and ask if they can give you a better one. The bank that gave you the best offer the first time should be visited in the end even if other banks have offered better terms this time. Why? Because there is a great chance that the same bank that gave you the best offer the first time will give you even a better one the second time. Continue visiting the banks until none of them is prepared to give you better terms. It is as simple as that.
Many banks will give you a great mortgage not only due to tough competition but also due to the fact that every new client helps bring more people to the bank. It actually makes sense if you think about it better. After all, you will most likely tell other people which bank gave you the best terms and those who need a mortgage too will remember your experience with the banks.