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If you’re a Canadian looking to buy in Israel — whether as an oleh, an investor, or a future retiree — one of the biggest surprises you’ll run into is how different the mortgage process is here compared to back home.

Here’s what you need to know before diving in.

1: Down Payments Are Higher in Israel

In Canada: In Canada, if you’re buying a primary residence under $500,000, you can put as little as 5% down. For homes priced between $500,000 and $999,999, you’ll need 5% on the first $500,000 and 10% on the remainder. For properties priced over $1 million, 20% down is required.

That said, the maximum property value for an insured mortgage is now $1.5 million. So you can potentially buy a home up to that amount with less than 20% down, as long as you meet the insurer’s guidelines. That includes having a minimum credit score of 600 and using the property as your primary residence.

For a primary residence, you can buy a home up to $1.5 million and put down less than 20%, as long as you get mortgage insurance (e.g., CMHC insurance).

In Israel: The minimum down payment for a primary residence is 25%, and for a second home or investment property, you’re looking at 50% down — minimum. Canadians wanting to invest in property in Israel will need a minimum down payment of 50%.

Add to that purchase taxes (Mas Rechisha), legal fees, agent fees, and bank fees — and your total cash outlay will be higher.

2: Mortgage Terms Are Structured Differently

In Canada: Loans are usually single-track loans. Both fixed as well as variable rate mortgages are available. Amortization is typically 25 to 30 years, with shorter fixed-rate terms (like 1 to 10 years) layered within.

In Israel: Loans are typically structured with multiple “tracks” (מסלולים). Each track has its own interest rate, repayment terms, and indexing — you might have:

•           A fixed rate shekel track

•           An adjustable rate (ARM) shekel track

•           A track linked to the prime rate

•           A track linked to the cost of living index

•           A track in USD or CAD (for foreign income)

These tracks are blended into a single mortgage, which makes Israeli mortgages more complex but potentially more flexible.

3: Contingencies

In Canada: In Canada, conditional agreements within a purchase contract are a well-established part of the real estate process. Buyers often include financing conditions in their offers to protect themselves in case they cannot secure a mortgage. Contingencies might include the sale of the buyer’s home or the outcome of the appraisal and inspection of the property.

In Israel: In Israel, purchase contracts do not generally include conditional agreements. Therefore, buyers are expected to take on more financial responsibility early in the transaction. It is therefore advisable to obtain a mortgage pre-approval before signing a purchase contract.

4: Mortgage Brokers: Very Different Roles

In Canada: Mortgage brokers are often independent and get paid by the bank. They present you with the best rates from a range of lenders.

In Israel: Mortgage brokers work directly for the client. Also, since the Israeli mortgage system allows for negotiable rates, terms, advocacy makes a big difference.

5: Timelines & Bureaucracy

In Canada: It’s usually a streamlined digital process. You sign some forms, upload your docs, and off you go.

In Israel: Welcome to the land of paperwork. You’ll need hard copies, original signatures, stamped approvals, and occasional visits to the bank in person. Patience (and a printer) will be your best friends.

So… What’s Better?

It’s not about better or worse — it’s about knowing the system. Buying property in Israel comes with its own rules, expectations, and culture. But with the right guidance and preparation, Canadians can absolutely succeed here.

Thinking of buying in Israel?

Let’s talk strategy — and start translating your Canadian advantage into Israeli keys.

Gershon Sheffield
+972-52-6050004 (Cell+WhatsApp)
(732) 813-1593 (US)
Email: gershon@mortgageisrael.com

When purchasing property in Israel, many buyers need to take out a mortgage from an Israeli lending institution. There is a wide range of mortgage options available and it is important to understand the options in order to select the loan that best fits your financial profile. The following is a description of the most common mortgage options available.

Shekel Mortgages

• Fixed Loans –  The benefit to these are that your payments won’t ever fluctuate, but you need to beware of the potential pre-payment penalties
• Variable Linked to Prime – The benefit is these typically offer cheaper rates than fixed, but be vigilant on watching your monthly payment because the nature of this loan is that it will fluctuate whenever the Bank of Israel changes the base rate.
• Adjustable rate mortgages – This is basically a hybrid of fixed and variable. This loan changes every 1.5 to 5 years. It will allow you to budget for several years at a time and the potential early termination fees are much smaller than the fixed loans.
• Linked to the Madad (cost of living index) – This option offers the lowest interest rates, but the principal is adjusted monthly based on the cost of living index, which typically rises 2% annually. While the initial payments are low, the long-term cost can exceed that of a mortgage linked to the prime rate.

Foreign Exchange Mortgages

A foreign currency mortgage is taken in currencies like USD or Euro, with interest based on SOFR or Euribor plus a fixed premium. Borrowers often choose this option to match their income currency and hedge against exchange rate fluctuations. For example, someone earning in USD may opt for a USD mortgage to avoid losses from a weaker dollar. Others are drawn by lower interest rates. However, this type of loan carries currency risk and should be considered only with professional guidance.

In Conclusion

A clear understanding of the terms and conditions associated with each loan product offered by Israeli banks is critical to securing the financing solution that best aligns with your financial goals. Even minor differences in interest rates or repayment terms can significantly impact the total cost of borrowing over time. To ensure the most favorable outcome, it is advisable to compare multiple loan options and engage in informed negotiations with the banks regarding rates and conditions prior to making a final decision.

When purchasing a home, beyond the down payment and mortgage, there are one-time closing costs that add up quickly.

Here’s my breakdown of what I typically see closing costs are, divided into mandatory and optional (but recommended) costs.

Mandatory Costs:

– Purchase Tax: Varies based on property value and status (Oleh, first-time buyer, etc.)

– Home Value Appraisal for Mortgage Purposes: Pre-Purchase ~4,000 NIS Post-Purchase ~1,200 – 2,500 NIS

– Builder’s Lawyer (for new construction purchases only): ~6,500 NIS

– Your Lawyer: ~0.5% – 1% of purchase price

– Bank Fees when opening a mortgage file: ~1,000 NIS

Optional but Recommended Costs:

– Real Estate Agent: ~2% of purchase price

– Mortgage Broker: ~1% of mortgage amount

– Structural Engineer: ~3,000 NIS

Sample Closing Costs: A first-time home buyer, buying a 2.2 million shekel apartment from their neighbor, will have closing costs that should be less than 5% of the apartment price.

Regarding the optional but recommended services, here is why I recommend them:

Mortgage Broker: Different lenders have different requirements, and how, and to whom, your financial story is presented to the bank impacts approval and loan terms. A mortgage broker with daily experience navigating these complexities helps you prepare the right documents and deals directly with the bank on your behalf. They also directly coordinate the legal paperwork, home and life insurance, appraisals etc., streamlining the process and increasing the chances of securing the best possible terms. The right broker can mean better rates, a faster process, and less stress.

Real Estate Agent: A real estate agent helps you find a home that fits your needs and budget. A good agent understands pricing trends, neighborhood dynamics – including religious, schooling, shopping, public transportation, future development plans etc. They handle negotiations and coordinate viewings, serving as the bridge between the buyer and seller.

Structural Engineer: I recommend a structural engineer when buying older secondhand homes in Israel where hidden structural problems can lead to costly repairs down the line. Structural engineers create a report for you that assesses the building’s foundation, structure, and overall condition, identifying potential issues such as cracks, settling, or outdated materials that may need repair.

Bottom Line: Unlike in other countries, closing costs in Israel cannot be included in the mortgage – they must be paid at signing or soon after. If you don’t plan ahead for them, it can put unexpected pressure on your finances. Factoring them in from the start helps you budget your home purchase properly.

Authors Disclaimer: The numbers above are approximates based on what I see every day as a broker and can vary based on each unique situation.

Having a reliable service to bring over funds from overseas and exchange to NIS is a very important element in the process of purchasing a property, and it is not as simple as it might seem. Whether the funds are for a down-payment, or for a full purchase price, you need a process that is inexpensive, that is reliable, that sees the funds arrive on time and that is stress-free (and it can be quite stressful when going directly through the banks).

The process of bringing over funds has several steps.

· First: It begins with the compliance stage, where the client must show the overseas source of the incoming funds, and the destination of the funds in Israel. Over the years, Israel has been plagued with money laundering schemes, and as a result has run into issues internationally, most notably with the IRS in the United States. Therefore, regulations now require strict documentation showing that the source of funds and destination of the funds are ‘kosher.’ The documentation usually consists of a letter from one’s accountant and lawyer. The compliance process takes several days to about a week.

· Second: Once approval is received, funds can be wired from the source bank overseas to the destination account in Israel. Depending on the source bank, there might be a wiring fee by the source bank. It usually takes several days to a week or more for funds to arrive.

· Third: When the funds arrive, they are converted to NIS and deposited in the designated account.

Different ways of bringing over funds:

The main methods of bringing over funds are via a bank directly, or through a foreign exchange company.

Why using a bank is generally not recommended:

· Fees: Banks charge an inordinate amount of fees. For example, they charge a receiving fee just for receiving the funds. They also charge a conversion fee for the action of converting to NIS. And then they also take a percentage of the conversion itself. Sometimes there are other fees as well.

· Timing: There are often delays when funds come through an Israeli bank.

· Customer Service: If there are issues that arise (and they do arise), it’s not easy getting in touch with a representative at the bank who can help you. It often requires multiple phone calls, being transferred from one department to the next, and then discovering that after being told that an issue is resolved, that it in fact was not resolved, and having to start the whole process again with the phone calls and emails etc.

· Payment Threshold: Banks usually have a threshold, such that if you want to make a payment out of your account that is above that threshold, you must confirm and authorize it. That process, while sometimes operating smoothly, often gets caught up in a bureaucratic approval process, which can cause delays and major headaches.

Why it is recommended to use a company like Wirepay Israel to bring over funds:

Personally, I recommend Wirepay Israel, a company which avoids many of the stresses of the banks.

· Fees: We don’t charge any of the extra fees the banks charge. We only take a small percentage of the conversion itself. That’s how we make our money. And the percentage we charge is smaller than you will find at the banks, and pretty much with most other currency exchange companies. The only time we charge a fee is for conversions of $US10,000 or less, where we charge a small $30 fee.

· Timing: Through our process, our clients’ funds arrive faster than transferring via a bank.

· Customer Service: Our customer service is the best in the industry. We aim to be as accessible and reachable as possible, and all of our agents are native English speakers.

· No Payment Threshold: At no extra charge we can make payments for you directly. This is often helpful when a client has not set up a bank account in Israel yet, but even more helpful in that when large payments have to be made, it won’t get tied up in a bureaucratic approval process. Once we receive approval from our client to make a payment for them, the payment is made.

· Expedient Service: We work to make the process seamless, easy and stress free for our clients

· Registered and Compliant: We are fully registered and compliant according to the law.

· Track Record: WirePay Israel has been in business for more than 18 years with a very happy and satisfied customer base.

So reach out to WirePay Israel for all your transfer needs!

Using a mortgage broker when purchasing property in Israel is a must. For many coming from abroad, there are many nuances both culturally and systemically in how the Israeli banking system works, which are quite different from the way things function in other western countries. This can make the mortgage process hard to understand, navigate, and negotiate.

Some important differences of note:

· There are no mortgage contingencies in Israel: In the US, the purchase contract is first signed. Then the purchaser has a certain amount of time to obtain a mortgage. If the mortgage is not forthcoming for whatever reason, the purchaser can back out and have their down-payment refunded. In Israel, once you sign your contract, you are tied to it. If later you find out that the bank will not give you a mortgage, you can lose your down-payment. For this reason, a mortgage pre-approval becomes very important, and a mortgage broker will be able to walk you through the process.

· You cannot roll your closing costs into your mortgage in Israel: In the US, you can have the bank pay all of your closing costs, and simply add it to the principle of your mortgage. However, in Israel you cannot do that. So, when budgeting your available funds for a down-payment, you must also consider the amount you will need for closing costs. There are sometimes separate bank loans that can help cover some or all of your closing costs. A mortgage broker can help explain the costs, explain all the options, and help with coordinating the bank loans if applicable.

· Mortgages in Israel are limited by age: Banks will generally only lend to age 80 or 85. So if you are 65 years old, the maximum term you will be able to get for a mortgage will be between 15–20 years. There are sometimes ways to work around this a bit, and your mortgage broker can help guide you.

· Banks are limited by law as to the amount they can lend you: For example, for a first time Israeli homebuyer, they can lend you only up to 75% of the price. For a foreigner, the limit is up to 50%. However, there are ways of obtaining additional funding up to 85% for both Israeli residents and foreign buyers, and one instance where 90% is possible. Your mortgage broker will help you with all of this.

· You can mix and match different types of loan products within one mortgage, but watch out for ‘linked’ products: In other parts of the world, the ’30 year fixed’ mortgage is the gold standard. In Israel, a 30 year fixed is available, but it’s not the necessarily the best option for all borrowers. There are also variable rate options, adjustable rate options, and even USD$ and Euro options. Each have their advantages and disadvantages, and it often makes sense to hedge the advantages and disadvantages of each by combining several products within your mortgage. A mortgage broker will help guide you through this. One important aspect that the banks often neglect to tell you, is that these different products are available as either ‘linked’ or ‘not-linked’ to the inflationary index. It’s important to understand the repercussions of each. Sometimes linked products can make sense, but if not weighed carefully, it can turn what looks like a cheaper mortgage on the surface, into quite an expensive one.

There are of course many other points of note and pitfalls to avoid when taking out a mortgage in Israel. That is why it is so important to use a mortgage broker. The benefits gained will more than justify the expense.

My goal as a mortgage broker is to alleviate the stress involved as much as possible, by guiding my clients through every step. With my previous experience as a lawyer in the US and now working within the Israeli banking system, I understand both systems in language, culture and process, and help bridge the gap for my clients, so that they feel comfortable and confident in their Israel purchase.

Moreover, I provide an American style and level of service, where I make myself accessible and available whenever needed. I understand what those coming from abroad are concerned about, and I know where they are coming from. And using the connections and relationships I have built with all of the banks, I work to get my clients the best deal for their situation.

The last few months have obviously brought many unexpected challenges to the Jewish people. May blessings be upon the soldiers of the IDF and all of Israel, wishing them a speedy victory, safety, security, and ultimately peace.

Since the breakout of the war, interest rates in Israel have risen slightly. The average rate for a 30-year fixed mortgage is now around 5.25%, which is still significantly lower than in the USA. This increase is one of the factors that has contributed to the slowdown in the real estate market since the start of the war.

While the overall market has been much quieter recently, there are interesting opportunities available for purchasers with a long term perspective and a bit of cautious optimism.

With higher interest rates and many construction projects delayed, builders are under pressure to bring in fresh cash now in order to minimize their need for bank financing. As a result, some are offering very attractive deals (with full bank guarantees) such as:

• A new development in Raanana is offering buyers who put down 20% now to not make any additional payments until getting the keys in 2–3 years. The final price is locked today and is not linked to the builder’s price index (as is common in most first-hand purchase contracts).
• A new luxury development in Ramat Beit Shemesh is offering buyers the opportunity to put down only 15% now and pay the balance upon the getting the keys in 3 years.
• A luxury development in Jerusalem is offering significantly discounted pricing to purchasers who can pay 50% now (the balance is due in 3 years when the project is ready and there is no linkage to the builder’s price index.

In addition to buying directly from builders there are a few more interesting ideas for second hand properties. An agent in Ashkelon has told me that there is a great opportunity now for purchasing second hand apartments. Of course, based on the news of the last two months that may sound silly and reckless, but her point is that the rockets will eventually stop and Ashkelon prices will go back up and eventually go even higher as it is a beautiful city near the beach and the prices are still significantly less than other nearby cities such as Ashdod.

And finally, because it is very unlikely that the Beit Shemesh municipality will grant permits for any more single family or duplex homes, Anglos have started to purchase single family homes in the nearby MOSHAVIM. The price of these single family, free standing homes (which are built on large plots of land) can still be quite a bit below the price for an attached duplex or a two story apartment in a large building. Due to this limited supply, it seems logical to project that the value of these homes will continue to rise sharply over the coming years as more people make Aliyah with the hope of finding a single family home in the Beit Shemesh area.

If you would like more information about any of these real estate opportunities, please contact me at asiegel@mortgageisrael.com and I will put you in touch with the relevant agent. And, of course, I would be happy to help with any questions related to mortgages, foreign exchange, or any other aspect of making Aliyah and/or purchasing property in Israel.

Over 20% of mortgages in Israel in 2024 was done through a Halva’at Kablan.

But what is a Halva’at Kablan and how can it help me?

For many homebuyers in Israel, purchasing a new apartment on paper—before construction is completed—is an attractive option. It allows buyers to lock in today’s prices and benefit from appreciation by the time they move in. However, it also presents a major financial challenge: buyers must secure a large initial down payment, and continue to pay rent on their current place of living, all while making mortgage payments on a property that isn’t yet built. This is where Halva’at Kablan, or the Builder’s Loan, comes in.

This financing model addresses both issues – providing the builder with funds to complete the project while easing the financial burden on the buyer during construction.

But what is Halva’at Kablan? Unlike a conventional mortgage, where the bank transfers a lump sum to the seller to purchase a completed property, a Builder’s Loan is structured to fund a home under construction. It involves three key players who sign a 3-way contract:

• The Buyer who gets pre-approved by a bank and makes an initial down payment to the developer.
• The Bank who issues funds in stages directly to the builder, based on construction milestones.
• The Builder (Kablan) who oversees construction and covers the interest payments on the loan until the project is completed (or a specific date).

While Halva’at Kablan offers lower upfront costs and financing flexibility, it also comes with risks that buyers must consider.

One concern is mortgage eligibility upon project completion. Pre-approval for a Builder’s Loan does not guarantee final mortgage approval, as banks reassess a buyer’s financial situation before converting the builders loan to a mortgage. To avoid issues, buyers should maintain a stable income, manage their debt wisely, and refrain from taking on new financial obligations that could impact their approval.

Another key risk is the potential for increased costs. If interest rates rise between the initial loan approval and final mortgage conversion, monthly payments could be significantly higher. Additionally, many builder contracts are linked to the Madad (Israeli Consumer Price Index), meaning the final purchase price may increase with inflation.

Since each Halva’at Kablan agreement differs, buyers must carefully review the terms. It is essential to clarify who covers interest payments during construction, if the price is linked to the Madad and how the bank handles mortgage conversion. Given the complexities involved, consulting a professional prior to signing is highly recommended to ensure you secure the best possible terms.