The different types of loans
In Israel a mortgage in Israel is called a mashkenta. It should be noted here that the property you buy is in fact your guarantee to the bank and it is possible to mortgage the property you want to buy.
Since 2021 there have been new reforms aimed at making the bank mortgage process more transparent and competitive for borrowers. During 2022, there will be three uniform options for monitoring interest rates:
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.
The fixed rate loan allows better stability for repayment. Fixed rate credit is calculated with monthly payments known in advance. There are two types of fixed rates, either indexed to inflation or without any indexation.
The borrowed capital is indexed on the indexation of the cost of living (says Madad). This is fixed from the start of the disbursement of funds and therefore this rate remains fixed throughout the loan. Indexation to the cost of living varies but remains low.
Note that reimbursement on a fixed rate can be made in foreign currency or in shekels.
It is possible to borrow at a variable rate in Israel called the Prime index. It is a loan indexed to the key rate set by the Governor of the Central Bank of Israel. It is revised at the end of each month and is not always subject to cost of living indexation. In fact, taking a variable rate loan allows you to repay this loan without penalty. However, Israeli banks in general will not be able to grant you more than a third of your loan at a variable rate to avoid sudden variations.
There is also, as a company, the possibility of a state-guaranteed loan, in place since 2003, to help small and medium-sized businesses in Israel. The state guarantee allows financing entities to offer advantageous terms to borrowers, such as reducing collateral required from the borrower and collecting relatively low interest rates. In Israel a small business: Turnover up to 25 million shekels.
A medium-sized company: Turnover between 25 and 100 million. Minimum 3 years of activity.
The loan guaranteed by the state is sometimes more advantageous because it can be granted even if the guarantees are insufficient or large overdraft. Loan authorization is granted within one month. The repayment can be spread over a period of 5 years. Reimbursement can be postponed for up to 6 months.
There are obviously conditions to be subject to this type of loan.
To really choose the best loan and have more information, it is best to ask a real estate financial advisor directly. Do not hesitate to contact me in order to obtain the necessary contacts. I work with real estate professionals and financial advisors. Do not hesitate to contact me
