Reverse Mortgages

The maximum term of a mortgage in Israel is 30 years but most banks will limit the term offered to a borrower so that the mortgage will be paid back by age 75 (some banks will allow the term to reach age 80 and even 85). In addition, a borrower must be able to show proof of income to the banks and the banks require the borrower attain a life insurance policy for the mortgage as well. For borrowers that are near retirement age or past it this can often create a situation where they are unable to attain a standard mortgage from the banks.

The solution that is offered for people in this situation is a reverse mortgage. The reverse mortgage is only available to borrowers who have reached the age of 60 (in some cases even 55). In the past the reverse mortgage was only offered by one insurance company but today there are a number of insurance companies and non- bank lenders that offer reverse mortgages. The terms between the companies are not identical but the basic concept is based on the following:

• The mortgage does not need to be paid back until the last borrower has passed away

• The borrower can choose between making no monthly payment, paying only the monthly interest payments or making both interest and principal payments every month

• No life insurance is required

• No proof of income is required

• LTV ratios varying starting from 15% and going up to 50% (increase is based on age)

• There are no early payment penalties

• The money can be used for any purpose the borrower chooses

 

As noted above there are difference between the various lenders where some will only allow a lump sum pay payment and others may allow the mortgage to be taken as a monthly stipend.

If you feel this might be the right solution for you or you would like to receive additional information please don’t hesitate to contact us and we would be happy to answer your questions.