An approval in principle (אישור עקרוני) is a bank's initial offer: "Based on what you told us, we are willing to give you a mortgage of X shekels, with this mix and these interest rates." It is the first and most important step in the process, and it usually costs nothing.
Why do you need an approval in principle?
- To know how much you can borrow – before you commit to an apartment.
- To receive interest offers – and compare banks.
- To sign a contract with confidence – you know the financing exists.
What is the approval based on?
The bank checks the information you provided (income, liabilities, equity and the apartment price), and usually your credit data as well. It is important to understand: an approval in principle is not a final approval. The bank will check the documents and the appraisal again, and if something does not match, the terms may change.
How long is it valid?
The offer is usually valid for a limited period (typically a few weeks). After that, the rates are updated to the market. So it is worth timing the approval close to the purchase date.
How to use it well
- Ask several banks for approvals – at least three. The difference between offers can reach tens of thousands of shekels over the life of the mortgage.
- Compare identical mixes – otherwise you are comparing apples and oranges.
- Let the banks compete – a good offer from one bank is a negotiating tool with another.
What is requested at this stage?
Usually: ID cards, recent pay slips (or annual reports for the self-employed), bank statements, and the apartment details if you already have them. Full list: the mortgage documents checklist.
A common question: does it hurt my credit rating?
Checking credit data for a mortgage offer is a normal part of the process. What matters more is how the requests are submitted. An organized submission with consistent information is better than randomly approaching many banks without preparation. Credit rating and mortgages