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the building’s foundation, structure, and overall condition, identifying potential issues such as cracks, settling, or outdated materials that may need repair.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.