Taking out a regular mortgage for the purchase of an apartment or property

A huge part of our clients strives to find a comfortable mortgage. One that will allow them to have an economic balance after the purchase of a property or apartment. Using professionals who specialize in the real estate market and in the field of mortgages in Israel can be the difference in obtaining a beneficial mortgage versus one that may weigh us down.

In the broad field of mortgages, you can find different mortgage tracks, with unique characteristics and hence each track also has several advantages and disadvantages that are important to know. The mortgage tracks are determined by several important parameters, firstly the type of loan that is suitable for the customer, a classic mortgage with a fixed monthly repayment, a reverse mortgage for those aged 55 and over that allows financial freedom without monthly repayments or alternatively a balloon loan for a short intermediary while examining the needs of the specific customer, while in the second stage we examine the right mix in the loan body, in the case of a regular mortgage, it is usually a fixed or variable interest rate,  A mortgage linked to the CPI or not and even a mortgage linked to foreign currency.

Payment of a fixed interest rate linked to the CPI

As its name implies, the payment of a fixed interest rate is a fixed payment that does not change, together with a CPI-indexed fund, referring here to the Consumer Price Index (an index that examines the percentage change over time in the expenditure required to purchase “fixed baskets” of goods and services). This mortgage track will include, in most cases, a relatively inexpensive interest rate, which, as noted, does not change at all and constitutes its most prominent advantage. On the other hand, the CPI-indexed fund may, of course, expand the monthly repayment, alongside the likelihood of paying early repayment fees in cases where we want to exit the mortgage track, whether to clear it or refinance it.

Payment of a fixed interest rate that is not indexed to the CPI

This is basically a mortgage track that has no characteristic that can affect the monthly repayment payment that remains stable. This is the main advantage of such a track, when on the other hand its interest rate will be relatively expensive and hence this track becomes unfavorable for quite a few young couples, who prefer to avoid paying more interest in advance, given the stability of the track.

The differences between indexed and unindexed fixed interest rates

It is clear to all that the payment of interest in the unindexed fixed interest rate track will be more expensive than the fixed and indexed interest rate track. In CPI-indexed tracks for 25 years, the interest rate will be 3.87 percent, while the unindexed track will be 4.55 percent, making it 0.68 percent more expensive. If the index stands at an annual average that expresses the difference between the two tracks, then there will be equality between the two. On the other hand, in cases where the CPI will be higher than the same difference that exists between the two tracks, then the fixed-rate and unindexed mortgage track will be more worthwhile, with a lower annual average that will reverse the creators. From this it can be understood that it still is only to make a rough estimate of which mortgage track is the most worthwhile. This is in addition to examining various other parameters, which vary for each couple. This, as mentioned, further emphasizes the necessity of examining the rest of the data and parameters, both current and future, so that the professionals can direct you to the path that suits you.

Choose fewer solid routes

Alongside the tracks that we presented earlier, there are also mortgage tracks that have an elevated level of risk, due to the dynamic and variable characteristics that exist in those tracks. Choosing these routes, of course, can be worthwhile, and here, too, you can find a broad solution with the professional teams of “Meni Group”. One of the tracks recognized under this category is the prime track. There is no indexation to the CPI, in which the monthly repayment is decided based on the prime interest rate—an interest rate that changes every month and even whenever there is a change in the prime interest rate. What makes this mortgage track less solid? On the other hand, it is possible to repay the mortgage at any point in time without paying an exit fee.