Increasing Parental Assistance in Buying Homes
Increasing Parental Assistance in Buying Homes
In recent times, there are many couples who do not have enough money to buy their own home, which resulted to an increasing number of pensioners with large mortgages. Considering the rising home prices, these couples are losing hope of buying their own home without financial assistance from their parents.
According to a recent report from Migdal Capital Markes, it would take 24.5 years for young couples earning the average wage to save NIS 450,000 for a deposit, assuming they set aside 10 percent of their net monthly salaries. This amount of money is only sufficient for a deposit on a NIS 1.5 million mortgage. The couple would still need money for their monthly payments.
The two main financial problems in terms of buying a home are the deposit, which is typically equivalent to 30 percent to 40 percent of the home’s cost, and the monthly payments.
Idan Elkabetz, a partner in consulting company Atid Mortgages, said that involvement of parents in buying a home is greater now than in the past. Due to the recent increases in home prices, there are a few options for young couples. It’s either they pay excessive prices or move away.
Parental assistance is especially needed for apartments that cost NIS 1.5 million or higher, which need deposits of NIS 500,000 to NIS 600,000. In several cases, this money comes from the parents.
David Meizlik, head of the mortgage department at Mercantile Discount Bank, said that the major challenge is to come up money for the deposit. They can get money from their savings, wedding presents, loans from employers and lastly, their parents.
Meizlik added that parental assistance is mostly significant in among the ultra-Orthodox public and the national religious because members of these communities marry at a young age. In contrast, secular couples typically marry later, so they have higher amounts of savings, they’re not dependent from their parents anymore, and have been working for many years that a few have attained management positions.
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