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Israeli Mortgages - FAQ

Is it possible for a foreign resident to get a loan in Israel?

Yes. Currently there are a number of banks that offer loans to foreigners. Each of these banks has its own individual products and terms of loan. The rates and service can vary greatly between different lenders. Foreign buyers are eligible to receive up to 50% Loan To Value (LTV)

Is it possible to be pre-approved for a mortgage in Israel?

Yes, and it is also advisable to obtain this pre-approval from a bank before purchasing.

Can I get a completely fixed rate mortgage?

Yes. Terms generally go up until 30 years. One must also note that fixed loans may have pre-penalty penalties.

Is there an age limit on mortgages?

Most banks will require borrowers to complete their mortgage payments by the age of 75. Sometimes we are able to negotiate longer terms for borrowers until the age of 80 or even 85.

What percentage loan can I get on my property?

It is possible to get up to 75% financing for an Israeli buying their only property. For Foreign residents 50% is the maximum.

How is the percentage calculated? Is it against what I paid for the property or is it calculated against the properties appraised value?

Almost always it is the lower of the two. That means that if you paid $300 000 and the property is appraised for $270 000 your percentage is calculated against the $270 000.

Is the appraised value usually close to the market price?

In most cases the answer is yes. However, it is very important to note that the appraisal can be lower. This is due to the fact that most banks are interested in the value of a property if it had to be resold quickly or if the market takes a turn for the worse. Luxury properties are most susceptible to lower than market evaluations. If you are interested in high percentage finance (over 60%) it is wise to do an appraisal before purchasing so you know where you stand. It is also important to choose an appraiser that is knowledgeable about the area you are buying in, especially if prices have changed recently.

Will the bank pay out the mortgage before I have paid my equity?

Most banks require the borrower to put in the majority of their equity before the bank will pay out even a portion of the loan. This is especially true when the property value is on the higher end of the scale or the percentage of financing is high. Usually under these conditions the banks become less flexible paying out until the down payment is fully paid. This is important to keep in mind so as not to run into cash flow problems. We have seen that certain banks are more flexible with this than others and have had success negotiating in this area if necessary.

Do the purchase taxes on the property need to be paid before the bank will pay out the loan?

On properties that are on the higher end of the spectrum this is often requested. We have had success negotiating part payment of taxes if a smaller portion of the mortgage is needed as part payment. However, most often the banks like to see proof of payment of the taxes before paying out the bulk of the loan. Purchase tax is dues within 45 days of contract signing so it usually occurs prior to disbursement of mortgage funds.

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