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Mortgages in Israel: The Basics

Mortgages in Israel: The Basics. By: Yair Fischman March 2013 JYFischman@gmail.com. ₪ . Costs of Mortgage Upfront. 30% deposit. Opening a File (Tik) Bank: 1. 0.25% of mortgage. 2. About 200 ₪ for registering property and other fees. Broker: 1. 1% of mortgage (negotiate).

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Mortgages in Israel: The Basics

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  1. Mortgages in Israel:The Basics By: Yair Fischman March 2013 JYFischman@gmail.com Mortgages in Israel

  2. ₪ Mortgages in Israel

  3. Costs of Mortgage Upfront • 30% deposit. • Opening a File (Tik) • Bank: 1. 0.25% of mortgage. 2. About 200 ₪ for registering property and other fees. • Broker: 1. 1% of mortgage (negotiate). • Life Insurance for value of Mortgage. • Property Insurance • Property Assessment: 330-600₪ for less than 2,000,000₪ • Engineer Mortgages in Israel

  4. Cost of Mortgage Per Month: Spitzer Mortgages in Israel

  5. Interest Rates Fixed Rate Linked to an Index Prime (P-0.95% for 25 years, August 2012 2.85%) Ogen Makam Israel Bonds (M+1%, August 2012 2.9%) Madad- Inflation in Israel (2-3%+ Madad) Foreign CurrencyLoans i.e. $, €, £, ¥... Libor Index (L+2%, Feb. 2013 2.63%) Other indexes Fixed rate for life of loan and not linked to any index. 5.0% for 25 years (July, 2012) 5.5% for 25 years (May, 2012) Note - All numbers are for 25 year loans. - Only Fixed and Prime Rates are negotiated rates. - Negotiate!!! Mortgages in Israel

  6. Interest Rates: Negotiated July 2012 Mortgages in Israel

  7. Comparing Fixed and Index Linked Mortgages Fixed Mortgage Index Linked Mortgages Mortgages in Israel

  8. Payment Schedules Mortgages in Israel

  9. Madad Mortgages: 3 Parts Mortgages in Israel

  10. Comparison: Madad & Prime Change in monthly cost after a rise in interest. Mortgages in Israel

  11. Madad Mortgages: Conclusion For a 25 Year mortgage • After 5 years you may still owe as much in principal as you borrowed. • Payment schedules are designed so it can be 7-15 years before the principal+ Madad goes down. • Monthly payments rise slowly but steadily. • After 7-12 years total payments may be equal or greater than monthly payments for fixed rate mortgages. • After 15-20 years mortgage payments may double. • Think twice. Mortgages in Israel

  12. Prime & Makam Linked Mortgages Prime & Makam Mortgages Differences Between Prime and Makam Linked Mortgages Mortgages in Israel

  13. Madad (CPI) Index 1998-2013 Source: Central Bureau of Statistics http://www1.cbs.gov.il/reader/prices/price_main_division_e.html?MainDivision=a&MyMonth=1&MyYear=2013 Mortgages in Israel

  14. Prime Index (1998- 2012) Source: Bank of Israel http://www.boi.org.il/ Mortgages in Israel

  15. Makam1 Year (Israeli Bond) Index 3/1998- 3/2013 Makam Yearly Averages 15 year average 5,56% Based on Averages From: http://www.boi.org.il/he/dataandstatistics/pages/seriessearchbysubject.aspx?Level=3&sId=41 Mortgages in Israel

  16. LIBOR(London Interbank Offered Rates) 1998-2013 Source: http://www.fedprimerate.com/libor/libor_rates_history.htm Mortgages in Israel

  17. Indexes Compared: Yearly Averages Mortgages in Israel

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