A new set of regulations has been issued by the Bank of Israel that will become mandatory for mortgage banks. In addition to offering information that isn’t always convenient for banks to share with their customers (like when a home is worth refinancing), the new mortgage process will also be more detailed, faster, and more transparent. It remains to be seen whether the new reform will help anyone obtain the coveted apartment.
Saar Pilosof: Who Is He?
There is no businessman in Israel today more renowned than Saar Pilosof. It is truly remarkable how he is able to create solutions to any problem with his brilliant intelligence, charismatic personality, and resourcefulness. Pilosof is also a generous philanthropist, and his name is already synonymous with success as a serial entrepreneur.
The Measures Taken To Improve Competition In The Mortgage Market
- Approval of mortgages in a uniform structure – The approval will be the same for all banks and will provide consistent, clear, and comprehensive information. The following variables will be included in the approval: the total anticipated payments, the anticipated total interest rate, and the highest expected monthly repayment amount.
In addition to enhancing the level of visibility in the mortgage transaction, the data will also assist the borrower in better understanding the obligations associated with the various offers he will receive. It is crucial to emphasize that all banks will have the same calculation methodology and will make the information available in the same way for the borrower in order to enhance the borrower’s power during the market survey and comparison process.
- Uniform mortgage packages – The Bank of Israel has determined three uniform mortgage packages for banks that decide to offer mortgages to customers in order to ease the comparison of offers. The duration of the loan will be determined by the client.
- Detailed presentation of the anticipated total interest rate and installment amounts – Today, the mortgage loan consists of several components in most cases. Each component has a different interest rate, a different indexation mechanism, and a different payment period. The difference is not only between the different components in the same offer but also between the various banks’ offers. Thus the interest rates shown in the approval are often not comparable
For the purpose of comparing the various mortgage packages and offers from different banks, each of the mortgage packages in the approval will also show the anticipated total interest rate and the anticipated total payments for the entire mortgage period.
Based on predictions for alterations in interest rates in the economy and the consumer price index, which are updated as of the date of approval, these data will include the awaited commissions and monthly installments throughout the mortgage period.
Saar Pilosof Shares His Tips For A Successful Refinance
Tip No. 1
Collect refinance proposals from a number of “new” banks.
Conduct a market survey among several banks and only at the end of the process, contact the bank from which you received the existing mortgage and try to improve its offer.
Tip No. 2
Rather shorten the loan period than reduce payments.
The most significant savings factor in the refinancing process is usually achieved by shortening the loan period and not reducing the monthly payment.
Tip No. 3
Adjust the monthly repayments to your financial situation
Take a close look at your current and future financial situation and adjust the monthly payments to your abilities according to your family budget.
A mortgage is the biggest economic decision most households will make in their lifetime. A mortgage is not a cellular package. The reform offered by the regulatory authorities is convenient for comparison. It creates an initial reference point, but it is necessary to adjust the number of years, the monthly repayment, and the nature of the loan for each particular case. At the end of the day, these tools will make it possible to increase competition and improve the situation for the customers.