In the Israeli real estate world, the situation of "home upgrading" is very common. Many families want to move to a larger apartment, but their equity is "trapped" in their current home that hasn't been sold yet. This is where the bridge loan comes into play (sometimes known as a "bullet mortgage" or "balloon mortgage").
A bridge loan is essentially a short-term loan (usually for two to four years), allowing you to receive financing against your existing property or the purchased asset, even before you've sold the old property. The purpose is to "bridge" the cash flow gap created between the payment date for the new home and the date of receiving funds from selling the old home.
As part of a professional mortgage consultation process, we examine whether this loan is the right tool for you. It allows you to purchase the new home with peace of mind, without compromising on the sale price of the old home under time pressure.
In this track, you don't pay anything during the loan period - neither principal nor interest. The entire payment (principal + accrued interest and indexation if applicable) is deferred to the loan repayment date, meaning the day you receive the money from selling the old home. This is an excellent solution for those who don't have additional monthly repayment capacity at the moment.
In this track (sometimes called "grace"), you pay only the interest on the loan monthly, while principal payment is deferred to the end of the period. The advantage is that the debt doesn't inflate significantly, but the disadvantage is that some monthly repayment capacity is required in addition to regular expenses.
A bridge loan is a powerful financial tool, but improper use can lead to a "honey trap." Incorrect planning of timelines, underestimating financing costs, or difficulty selling the old property can create heavy financial pressure.
As experienced mortgage consultants, we build the optimal "bridge mix" for you. We check repayment capacity, plan the exit strategy, and ensure you don't exceed Bank of Israel limitations.
Whether you need a mortgage consultation solution for home upgraders or are considering options for leveraging properties, our professional guidance will ensure your transition to the new home is smooth, safe, and economical.
Schedule a consultation meetingObtaining bank approval based on income and property values (existing and purchased).
Conducting appraisals for both the sold property and the purchased property to determine maximum financing amount.
Receiving funds and payment to the new home sellers.
Selling the old home and settling the bridge loan using sale proceeds.
Usually banks approve bridge loans for periods of two to four years. The goal is to provide reasonable time for property sale, but not to make the loan permanent.
Depends on the chosen track. If the bridge loan was taken on a prime track, there's usually no early repayment fee. In fixed or index-linked tracks there might be fees, so it's important to plan this in advance with a mortgage consultant.
This is an undesirable situation. In some cases, you can request an extension from the bank, but this involves special approvals and costs. Therefore, setting a realistic sale price and proper planning are critical for process success.
