Mortgages in Israel have been affected by Coronavirus too. Due to the pandemic, some significant changes in home-financing arrangements have been introduced in an attempt to minimize the negative impact on the public.
The new mortgage policies are intended to provide mortgage-relief to existing borrowers and to offer more favorable terms for homebuyers in Israel:
1. Increased LTV for Cash-Out
The Bank of Israel has eased regulations by increasing cash-out limits from 50% to 70% Loan to Value. For those looking to take cash out of their existing properties in Israel, this is an opportune time. Funds extracted may be used for any purpose except for the purpose of buying a property in Israel. This change in regulations applies to both Israeli residents and foreign investors.
2. Selectable Monthly Repayment
The new mortgage product allows a new or existing borrower to choose how much he/she repays every month for the first half of the loan term (for example, on a 30-year term mortgage the borrower can decide how much to pay every month for the first 15 years).
- This feature may only be applied when taking a fixed-rate mortgage in shekels (either linked to inflation or non-linked to inflation).
- It is not required to take the entire mortgage on this product, i.e. a borrower may take half of the mortgage as a regular mortgage and half as this new product.
3. Reduced Interest rates
Interest rates in US dollars have come down significantly for both purchase and refinance – please see below for current rates:
- 3-month adjustable in US Dollars (up to 30 year term): 2.1% – 2.5%
- 5-year fixed in US Dollars (up to 25 year term): 2.7% – 2.9%
* For loans over 5MM NIS or for a cash-out refinance add 0.5% – 1%
** The rates mentioned above are subject to change based on the credit profile of the borrowers
If you are looking for mortgage relief or refinancing on your current mortgage, or if you are buying a home in Israel and taking a new mortgage, it is advisable to consider these changes which could have a significant impact on your loan repayments.
Moises Zack is a senior mortgage consultant at First Israel Mortgages. For a complimentary mortgage consultation, Moises can be reached at [email protected] or at tel: +972-54 397 1901.