Even after all that work figuring out how much you’ll be able to finance, those are only the hard limits for mortgages in Israel. You’re still going to have to consider your individual case and how the bank is going to assess your finances and suitability for a mortgage. In general, your bank will approve mortgages only if the payments would work out to 33% or less of your net income.
However, we again find that a simple calculation has some strings attached. The bank will use what they call “qualifying rates” when calculating what you can afford. This means they’re going to see if you can still afford the mortgage payments if interest rates were 2 to 3 percent higher.
Any lender will, of course, evaluate your current debt load as well before offering you a mortgage. For the most part, they won’t extend a mortgage that would put your overall debt to income ratio over 40%. This could put those with other loans or substantial debt at a disadvantage.
The number of factors that can lead to you either not getting the amount you’re looking for or not getting approved at all stack up quickly. For your best chance at navigating through this system, you’re going to want the professional help of a private mortgage advisor.
Always Get Pre-Approval First
In Israel, one of the biggest snags you can run into is starting the process without getting your pre-approval first. While in many countries, there are contingencies in property purchase agreements that let buyers off the hook if financing falls through, this isn’t the case in Israel.
You can face severe consequences if you start a purchase agreement without a pre-approval, and then it turns you can’t get enough financing later on. You might lose any deposit you’ve put down, which could be a significant sum.
Pre-approval is the first step in the process, and you can go to any bank or lender of your choice to get a certificate. This doesn’t mean you agree to a mortgage from that bank at this time. You can still change your mind later. It does ensure that you’re able to access that level of financing before you start making
offers.
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