Is a guarantor required for a mortgage in Israel?
Banks may sometimes require a guarantor (Arev) for a mortgage, particularly if the borrower’s financial situation is considered high-risk. A guarantor agrees to take responsibility for the loan payments if the borrower defaults. This is more common for young buyers, self-employed individuals with irregular income, or those with limited credit history.
Israeli banks also allow co-signers (Mitztaref L’Mashkanta), who are legally responsible for the mortgage alongside the primary borrower. This is often used when parents help their children secure a mortgage by co-signing, strengthening their financial profile, and improving loan terms. Similarly, children may co-sign for elderly parents who have reduced income.
However, co-signing a mortgage is a serious financial commitment. The co-signer’s borrowing capacity may be affected because banks consider their liability for the mortgage when assessing their creditworthiness. This could limit their ability to take out loans or mortgages in the future.
It’s crucial to fully understand the risks before agreeing to be a guarantor or co-signer. Consulting a mortgage advisor or financial expert can help determine the best approach.
This guide is intended to provide the reader with general information and not to serve as legal or other professional advice. Readers are advised to obtain advice from qualified professionals before entering into any real estate transaction.
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