How to Save Hundreds of Thousands of Shekels on Your Mortgage?

The mortgage is the largest financial commitment for most households in Israel. Incorrect planning can cost you dearly. In this guide, we'll reveal the secrets to building a smart mix, conducting effective negotiations, and properly using mortgage advisory services.

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Why do most people pay too much for their mortgage?

When we approach taking a mortgage, we face a strong and experienced financial entity – the bank. The bank's goal, like any economic business, is to maximize its profits. In contrast, the borrower's interest is to minimize costs and the total final repayment to the bank. This gap creates an inherent conflict of interest. Without professional knowledge or guidance from objective mortgage advisory, the average borrower struggles to understand the small nuances that make a big difference.

A common mistake is focusing solely on the initial monthly repayment amount. Banks may offer tracks with low initial repayments, but ones that are linked to the Consumer Price Index or at variable interest rates that could spike in the future. The result is a mortgage that looks cheap initially but becomes very expensive over the years, sometimes with a difference of hundreds of thousands of shekels.

3 Iron Principles for Mortgage Savings

Building a Smart Mix

The biggest secret is not just the interest rate, but the composition of tracks (the mix). The right combination between fixed, variable, linked and unlinked tracks is the key to stability. A personally tailored mix will protect you from sharp index increases and allow flexibility for future changes without heavy exit penalties.

Aggressive Negotiation

The bank is a business, and interest rates are the product price. Like in any market, it's possible and advisable to negotiate. After building the right mix, you should submit it to several banks and conduct a pricing round. An experienced mortgage advisor knows exactly how low the bank can go and can secure conditions for you that a private client would struggle to achieve alone.

Long-term Planning

The mortgage is dynamic. What's right today won't necessarily be right in 5 years. Shortening the mortgage period by a few years can save tens of thousands of shekels in interest payments. You should plan future exit points and refinancing according to the family's expected income projections.

The Importance of Advisory for First-time Buyers and Home Upgraders

For young couples, mortgage advisory for a first home is particularly critical. Usually, this is the first major transaction of their lives, and lack of experience can lead to costly mistakes. It's important to understand the real repayment capacity, take into account associated expenses (such as appraisals, lawyer fees, and construction input index) and build a plan that will allow the family to grow financially and not suffocate under the burden of payments.

Even when it comes to mortgage advisory for home upgraders, the complexity doesn't decrease. Here additional elements come into play such as transferring an existing mortgage, bridge loans until selling the old property, and synchronizing between payment and receipt dates. Poor planning at this stage can lead to severe cash flow problems and unnecessary interest payments on transition loans.

When Should You Refinance Your Mortgage?

Even if you've already taken a mortgage before, it doesn't mean you're "stuck" with it forever. The mortgage market changes constantly. A process of mortgage refinancing and improving conditions allows you to replace the old mortgage with a new one, under better terms. This is especially worthwhile when interest rates in the economy drop, when your income increases and you can increase the monthly repayment to shorten the period, or when you receive a lump sum (like a training fund) and want to pay off part of the debt.

Golden Tip:

Never sign a mortgage under time pressure. Banks tend to limit the validity of interest rates to 24 days, but proper advance planning will prevent you from needing to make hasty decisions at the last minute.

Want to check how much you can save?

Don't remain in doubt. Our professional team will be happy to review your mortgage data and build a personalized savings plan for you.

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