Mortgage is just another name for a loan, which allows you to purchase a house. Basically, Mortgage rates are lower than regular commercial loans you can get from your local bank. That because mortgage is a “secured” loan against the borrower’s property. To get the loan, the banks will ask for a written note of indebtedness such as a Promissory Note.
In many cases each country has its own institution or banks who sell Mortgages. In some European countries you can have a “secured” loan only if you have a local property in the same country. For example, an Italian bank will be able to fund buying of a property in Italy.
What are the differences between European Mortgage Versus a Mortgage in Israel?
The Amount of The Loan: Israeli banks will fund up to 50% of the property value to a non-Israeli resident. This is very important point since many buyers can find that they cannot complete the transaction because there is not enough capital. For an Israeli resident the fund can be up to 75% of the property value.
Mortgage Rates: Mortgage rates in Israel are considerably lower than average European mortgage rates. The average mortgage rates in Israel vary from 0.8%-3% per year only. During 2020 mortgage rates across European fell. But Mortgage rates from Israeli banks are still considerably lower.
Rates Types: In many European mortgages there are only a fixed and a long period variable rate. Israeli Mortgage banks offer more attractive interest type such as monthly variable rate, or fixed variable for a period of 5 years. Additionally, Israeli banks offer a regular fixed rate. Its’ worth mentioning that in Israel there is a unique mortgage rate type which might be fixed but adjusted to the consumer price index.
Getting Mortgage Preapproval: Before the bank agrees to offer you a loan it will assess your creditworthiness. The Mortgage bank will estimate your ability to pay the mortgage every month.
The Process of Getting the Mortgage Payment: In Israel it might take more time between submitting the loan request till paying the mortgage to the property seller. This is because the Mortgage banks in Israel carefully check the ability of the buyer to pay back the loan every month. The bank requires registration of the loan in the Land Registry Office. Again, Israel’s mortgages money is transferred only to the seller account. This is in contrary to some European countries where the mortgage can be transferred directly to the buyer’s bank account.
Many buyers from European countries who purchased a house in Israel cannot understand the long process and tiresome bureaucracy with Israeli Mortgage banks. Therefore, it is recommended to use the services of certified mortgage broker in Israel which can help you in getting the best mortgage according to your needs. We searched for an English speaking mortgage broker in Israel and found a website named evensapir.co.il. There are others, so if you are an institutional investor or simply looking to diversify your portfolio make sure to do your research properly.