The bank will give you a mortgage. The question is whether the terms you receive are the best you could have gotten. Usually, the answer is no.
It’s not that the bank wants to cheat you. They simply don’t work for you. They work for their side. That makes sense from their perspective. The problem is that most people don’t understand this until they’ve already signed.
What a Mortgage Advisor Does That You Don’t Do Alone
When you approach one bank, that bank knows it has no competition. When an advisor runs a tender between five or six banks, everyone knows there is competition. The rate difference that emerges from this alone ranges between 0.3% and 0.8% – and on a million- NIS mortgage over 25 years, that’s worth between 80,000 and 200,000 NIS.
Beyond the rate, there’s the question of the mortgage mix (tamhil). What’s the right combination of tracks? Prime, fixed non- indexed (KaLatz), fixed CPI- indexed, variable indexed – each combination behaves differently when the Bank of Israel rate rises, when CPI rises, and when you want early repayment. A mortgage mix that suits a primary residence doesn’t necessarily suit an investment property.
Investment Mortgages: Three Completely Different Things
First, the loan- to- value (LTV) ratio. First- home buyers receive up to 75% LTV, upgraders (selling their current home) up to 70%, and investors buying an investment property – only 50% of the property’s value. That means a much larger equity requirement for an investment mortgage, and someone planning too late will discover they can’t close a deal they’ve already committed to.
Second, higher interest rates. Banks price higher risk for non- residential properties. A difference of 0.3%–0.5% on a million NIS over twenty years is tens of thousands of shekels.
Third, the goal is different. In residential you want peace of mind. In investment you want optimization: increase return on equity, maintain flexibility for the next deal, and protect against scenarios that change repayment over time.
Questions Worth Asking Any Mortgage Advisor Before Closing
How many banks do you actually work with? Under ten is limited. How are you compensated? It’s important to know if there’s an incentive driving a particular recommendation. How many deals have you done in the past year? Specific experience in investments, not just residential? And how do you protect the client against rate increases – not when talking about tracks in general, but when discussing concrete scenarios.
How Much Mortgage Consulting Costs and When It Pays Back
Mortgage Consulting typically costs between 6,000 and 9,000 NIS. The average savings we see on deals we guide runs between 60,000 and 150,000 NIS over the mortgage’s lifetime. The math is clear.
At Almi, Mortgage Consulting is integrated within Full Investment Advisory. But it’s also available separately for anyone who has already found an apartment and wants to make sure the financing is optimal. You don’t need to go through our entire process for it.