The criteria for obtaining a Mashkenta ( or Mortgage )
First of all, you have to check the percentage of financing and decide on the type of loan chosen ( to read in my articles ):
The first criterion for obtaining a mortgage is the percentage of financing. The percentage of financing is equal to the ratio between the value of the property and the maximum loan amount that the bank can approve. The maximum amount of the mortgage is calculated from the value of the property according to the purchase contract or according to the evaluation of the property. The bank will base itself on the lowest value between the two. The bank is limited in the maximum mortgage amount it can grant due to Bank of Israel regulations.
As a reminder, in 2022 there will be three uniform interest rate monitoring options:
100% non-indexed fixed rate; 1/3 non-indexed fixed rate, 1/3 indexed variable rate and 1/3 indexed to the prime rate; 1/2 non-indexed fixed rate, 1/2 indexed to prime rate.
Banks will be required to provide the expected total interest rate as well as the schedule over the full term of the loan.
Depending on your status, the bank can finance up to 75% financing of the value of the property for your first property then the maximum financing that can be obtained is 50% of the value of the property purchased.
When checking and like any self-respecting bank, the age of the borrowers is important: You can obtain a mortgage until the age of 75 or for a maximum period of 30 years. During a rental investment, it is sometimes possible to negotiate up to 80 years.
Also note that your bank history will be reviewed: authorized overdraft exceeded, rejection of cheques/direct debits, bankruptcy, etc.
The bank may ask for your consent to access your banking history through the Bank of Israel in order to assess the risk.
Moreover, even if the lawyer also takes care of it, the legal department of the bank approves the property as collateral, therefore against an expert report that we must carry out on the property that we wish to pledge. Following the expert’s report, the bank can accept or refuse the mortgage if there is a construction defect in accordance with the building permit, problem with registering the property in the cadastre ( says the Nesach Tabo ), debts/seizures on the property, etc.
Finally, the mortgaged property itself is not sufficient security for the bank. It must ensure your ability to repay. The maximum debt ratio is 40% of the total net income of borrowers. The repayment of the future mortgage loan must be taken into account as well as the repayments of existing loans.
For more advice on obtaining a mashkenta, I recommend you to meet with a real estate professional/advisor and/or a banker.
Do not hesitate to contact me: