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Mortgages for New Olim
Government mortgages provide Olim who are not homeowners with a limited, low interest mortgage. The government mortgage is a shekel loan linked to the cost of living index. Rates are usually 4%. The loan can be paid back at any point without penalty.
To qualify, the person or family must be:
- Non-homeowners – “A person who isn’t and hasn’t been registered as owner or part owner of a property”
- Aged over 21
- Temporary Residents and Tourists are not eligible for assistance
For Olim and eligible Israelis, the entitlement is calculated on the basis of age, number of siblings, number of children, years of marriage and army service. The eligible person (or couple) receives points for each of these factors, the total sum being calculated as a result of these points.
It is possible to estimate the amount of governent loan you qualify for by visiting a local bank.
International Clients
Whether you are living abroad or are looking to make Aliya to Israel, we can help with arranging a mortgage from anywhere in the world.
The entire application can be submitted by fax and email and we can usually get an approval within 48hrs. Most of the mortgage documentation can be signed by your attorney in Israel or at an Israeli Consulate, so there is no need to be present in Israel to secure the loan.
We take care of all the mortgage processing, including appraisals, insurance and other administrative matters relating the loan.
Through our company foreign buyers don’t get the “tourist” rates offered by Israel banks, rather they get the same low interest rates, available usually only to preferred Israeli clients.
Mortgage Options
Shekel Mortgages
Fixed Shekel mortgages
Banks offer completely fixed shekel loans for up to 30 years. This loan is not linked to any index so that your mortgage payments stay the same throughout the life of the loan. Any fixed loan in Israel carries the risk of pre-payment penalties.
Mortgages linked to the CPI with fixed interest rates
A mortgage at a fixed interest rate linked to the consumer price index for a period of 4 to 30 Years. Rates are currently at or near all time lows – between 2% and 4% depending on the term of the loan, the loan-to value ratio, the borrower’s creditworthiness and more. The principle is re-adjusted each month according to CPI. This is considered fixed, but in fact will go up throughout the life of the loan as CPI increases. This loan has the risk of pre-payment penalties.
Mortgages linked to the CPI with variable interest rates
This loan is similar to the CPI linked fixed loan, except the interest rate will change throughout the life of the loan (according to the negotiated term). Though this has the added risk of the interest rate changing over time, it also has the advantage of not having any pre-payment penalty.
A linked mortgage at the Prime interest rate
Current regulations allow for up to a third of someone’s mortgage to be variable and linked to the Prime rate, which is set by the Bank of Israel. Prime is currently very low and many banks can offer rates at approximately Prime minus .75%.
Foreign Currency Mortgage
A foreign currency mortgage is available in a number of the major currencies. The mortgage’s interest is the LIBOR rate plus a fixed premium set by the bank. These mortgages are generally available up to 30 years and the repayment is in the currency that was borrowed.
Dollar Linked Mortgage
A Dollar linked mortgage is a shekel mortgage linked to the dollar rate for a period of up to 30 years. The currency of loan and repayment is in shekels according to the dollar rate. The mortgage’s interest is the LIBOR rate plus a fixed premium set by the bank.
Euro Linked Mortgage
Similar terms to dollar linked, except linked to the Euro. This loan is typically most suited to a person whose primary income is in Euros.
Fixed Dollar Mortgages
Currently there are fixed dollar loans available for a ten year term. There is also a dollar loan for up 25 years that adjusts every five years (commonly referred to as Adjustable Rate Mortgages). There is no long term completely fixed dollar loans beyond ten years.
Bridge Loan
A loan extended to borrowers who own an apartment, for purchasing a property in the interim period until their previous apartment is sold. This is a short-term loan for a period of up to two years. This is available as a loan of up to 50% of your first property.
General Terms and Conditions
- Depending on the bank the LIBOR rate may change every 3 or 6 months.
- Most dollar-linked loans have the possibility of early repayment without incurring any major penalty or fee.
- In some cases it is possible to arrange interest only payments up to a maximum of 2 years depending on the financial strength of the applicant.
Ask us anything.
We’re happy to answer any questions you might have about buying a home in Israel.
