The banks in Jerusalem offer friendly mortgage policies that make obtaining a loan simple and easy. However, some aspects of the mortgage can be confusing – especially for new immigrants and foreign investors.
For example, the banks here offer a variety of mortgage schemes. Each of these mortgage types caters to the requirements of different clientele. Factors include the client’s economic standing, currency of income, financial goals, place of residency and other personal considerations.
So, which is the best choice for you when you buy Jerusalem property? Here is an overview of the vairous options:
Dollar Linked – This means that payments can increase or decrease according to the fluctuations of the dollar/shekel rate. Though the terms are determined by the value of dollar, payments are made in shekels. Euro linked mortgage is also available in Jerusalem banks. This option is recommended for those who have income linked to the Dollar or Euro.
Shekel Linked – These loans can be take for up to 30 years and are usually linked to the rate of inflation. Adjustments to payment amounts are made on the outstanding loan depending on the inflation calculated by the Bank of Israel. Interest rates with this scheme may be lower than other options, but the amount may go up or down over time. This option is recommended for those who are purchasing properties for long term residential or investment purposes.
Real Fixed – The rate of interest remains fixed and no adjustments are made on the outstanding amount of the loan. This rate is usually higher than other schemes in order to compensate for potential fluctuations, but you know exactly how much you will be paying. This option is recommended for those how have a fixed income.
Prime Interest / Variable Israeli Interest – These rates can vary greatly depending on various economic and political factors. This option is recommended for short to mid-term real estate investors with a good understanding of financial markets.
Bridge Loan – This facility is used when purchase of a future property is dependent on the sale of an existing property. Once the existing property is sold, the loan can be repaid. This option is recommended for those who need to sell an existing property before than purchase a new one.
Most mortgage brokers today, recommend taking a combination of these loan options and dividing the mortgage amount amongst them.
Whatever be the type of mortgage loan you choose, make sure that you understand all the terms and conditions before making this decision.