Ever wonder if your bank is truly giving you the best mortgage deal in Israel? Spoiler alert: It’s probably not. Most people don’t realize it, but simply getting a second mortgage offer from another bank could save you tens of thousands of shekels over the life of your loan. Seriously—let’s dive into why this matters.
The Big Mistake Most Homebuyers Make
Buying a home is thrilling—but mortgages? Less so. It’s easy to just head over to your usual bank (where you have your checking or savings account) and assume they’ll give you a great deal because you’re already their customer. Unfortunately, this assumption can cost you big-time.
Here’s a quick story to illustrate:
A recent client of mine initially asked their regular bank for a mortgage quote. The banker was quick, friendly, and gave an attractive initial offer. Many would stop right here—thinking, “That’s easy, let’s sign!”
But here’s the twist: we took that exact mortgage structure (known as a “mortgage mix,” or Tamlil Mishkanta in Hebrew, which means combining different types of mortgage loans) and presented it to another bank. Guess what? Bank number two offered significantly better interest rates (the cost you pay to borrow money).
Understanding Interest Rates: Why Small Differences Matter
If you’re thinking, “Come on, how much difference can it really make?”—a lot, actually.
Interest rates determine your monthly mortgage payments and how much you’ll pay in total. Even a tiny difference—say, 0.1% or 0.2%—can translate into huge savings.
For example, let’s say your first offer from Bank A had monthly payments roughly around 4,700 shekels. After presenting that same mortgage mix to Bank B, we got a new offer at about 4,480 shekels per month. Sounds minor? Think again. Over the life of a typical mortgage (usually around 20-30 years in Israel), this small monthly difference amounts to savings of approximately 45,000 shekels! That’s enough to renovate your kitchen or even go on a nice family vacation.
Two Critical Steps for the Best Mortgage Deal
Here’s exactly how to make sure you’re getting the best possible mortgage deal in Israel:
Step 1: Always Get at Least Two Mortgage Offers
Never, ever rely solely on your current bank’s first offer. Take your mortgage mix (the combination of mortgage tracks tailored to your personal financial situation) and present it to at least one additional bank. Even better? Try three banks. Competition creates better deals.
Step 2: Customize Your Mortgage Mix
Banks offer various types of mortgage loans (“tracks”):
- Fixed-rate: Interest stays the same throughout your loan.
- Variable-rate: Interest changes based on market conditions.
- Linked (Madad): Interest linked to inflation.
A good mortgage mix carefully balances these types based on your personal financial situation and your tolerance for risk. Crafting a personalized mix before negotiating rates is essential.
Pro Tips to Keep in Mind:
- Don’t reveal immediately which bank gave you the better offer. Let the banks compete for your business.
- Be patient—bankers often improve their offers when they realize they’re competing.
- Even if your bank “knows” you, it doesn’t necessarily mean they’ll give you their best offer upfront.
Too Long; Didn’t Read (TL;DR):
- Always get mortgage quotes from at least two banks.
- Small differences in interest rates save tens of thousands of shekels.
- Personalize your mortgage mix (combination of loan types) first.
- Let banks compete for your mortgage; competition lowers your costs.
- Never settle for the first offer—there’s almost always room for improvement.
Bottom Line: Competition Pays Off
At the end of the day, banks want your business. When you take your mortgage request to multiple banks, you’re placing yourself in a position of strength. And strength means better interest rates, lower payments, and big savings.
Next time you’re considering a mortgage in Israel, remember: your bank isn’t doing you a favor. You’re the one with options—use them!
