Considering deferring your mortgage repayment?
Bank of Israel experts explain how, how much and why
738,000 loans totaling NIS 9.5 billion were rejected
Photography:
envato elements
Produced by the Department of Special Supplements
How much will it help you to defer the mortgage or loan you took out?
The fear is that this is a postponement of the end and not a real solution, and in the end you will pay dearly.
With the help of the Banking Supervisor's experts at the Bank of Israel, we tried to understand how it is possible to provide a real solution to the mortgage crisis during the Corona period.
What is the outline for deferring loans and mortgages?
In order to help customers who need cash flow assistance to overcome the crisis, the Supervisor of Banks has formulated a uniform outline for deferring loan payments.
The outline covers three sectors of activity: mortgages, consumer credit and business credit.
Households and small business owners can defer loan payments without commission and at the same interest rate at which the loan was taken.
A distinction must be made between the outline of the banking system and that of credit card companies.
What is the outline for deferring loans of the banking system?
Bank customers can submit a request for deferral of mortgage payments, consumer credit and credit to businesses until 31.12.2020.
Customers who have deferred payments for a period of up to 6 months can receive an additional deferral until the end of the year and arrive at a cumulative deferral of 9 months.
Customers who have not yet declined payments and are now interested in deferring them will be able to receive a deferral of up to 6 months.
In mortgages the deferral is that of the principal and interest, without the discretion of the bank.
In credit consumers the deferral without discretion to the bank is that of the principal component of the loan.
A bank may also allow a deferral of interest in addition to the deferral of the principal.
Business credit - A business with an annual turnover of up to NIS 25 million, which was affected as a result of the crisis, can apply for a deferral of loans for up to 6 months, when the deferral will be made subject to the Bank's discretion.
What happens if the applicant is already late in repayment payments, and only now requests a postponement?
As a general rule, if the arrears exceed a period of two months prior to the date of submission of the application, it will not be possible to defer payments, but each bank may extend the terms of the outline for the benefit of its customers.
In business loans the discretion is given to the bank.
How many borrowers have so far taken advantage of the opportunity to defer loan repayments?
With regard to loans provided by the banks: From March 1, 2013 to September 18, 2020, 738,000 loans totaling NIS 9.5 billion were rejected.
Of these, about 400,000 are consumer loans, about 175,000 are mortgages and about 163,000 are loans to businesses.
What should I know before deferring a mortgage?
Before making a decision on deferring mortgage payments it is important that the customer understands that deferring payments involves cost, and therefore he should examine the implications of deferral.
Attention should be paid to the information that the bank is obliged to give to the customer for the purpose of making an informed decision: the economic price of the deferral, which includes the cost of interest and the amount of the monthly charge to charge after the deferral.
The deferral of the mortgages will not be possible for an indefinite period, and therefore the next period should be used to reach agreements with the bank, which will allow the customer to meet his obligations with a forward-looking view.
What is the outline for deferring credit card companies' loans?
The deferral of payments will be with respect to consumer loans and loans to businesses are made as follows: Consumer loan up to NIS 100,000 - the deferral will be made for a period of 3 months, without the company's discretion.
In addition, there is an option, at the Company's discretion, to further defer 3 months to these loans (up to 6 months in total).
The deferral without the Company's discretion is that of the principal component of the loan.
The credit card company may also allow a deferral of the interest in addition to the deferral of the principal.
The deferral will be made to customers who pay the loan as a series.
Business loan - For a business with an annual turnover of up to NIS 25 million, which was damaged as a result of the crisis, it will be possible to postpone it for a period of up to 3 months, at the company's discretion.
The outline refers to a loan that was repaid on a regular basis and it is expected that the business will overcome the crisis and be able to meet the loan repayment after the crisis.
Produced by the Department of Special Supplements