People who have great relationships with their bank often think they are getting the best financing deals available on the market. Think again. Take for instance the story that recently came through our office.
A wealthy gentleman here in Israel purchased a second property for $4.2 Million and applied for a mortgage with his bank. He was one of their high net worth clients and a very good customer. After taking out a mortgage with his bank on his first property five years earlier, he already had several hundred thousand dollars in his checking account and believed he had a great working relationship with his bankers. The bank approved him with an interest rate of 6.4% on a $2.1 million loan.
That means that over the course of a 20 years term loan he would pay $1.63 Million in interest. No matter how warm your relationship with your bank, there very well might be room for improvement. He came to us to explore his borrowing options and we were able to secure an interest rate of 3.5% on the same mortgage product and for the same duration. Over 20 years, at an interest rate of 3.5%, on a $2.1 million loan, the total interest paid is $800,000.
That’s a savings of over $830,000 US Dollars. It’s always advisable to get as much negotiating leverage with your bank as you can even if you think you have a great relationship with them.
Please be in touch if you have any questions about mortgages in Israel.