Obtaining a mortgage in Israel can be arduous, so IsraFinance are here to help you obtain a mortgage with ease. Whether you are an experienced real estate investor, a first-time homebuyer, or a returning citizen looking to settle in Israel, if you don't have all the cash you need to buy a property or wish to. We guide you to be able to make wise decisions, whether you're thinking about an adjustable-rate mortgage for flexibility or a fixed-rate mortgage to offer stability in potentially volatile times.
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To qualify for a mortgage in Israel, you typically need to have a valid Israeli ID, proof of income, and a down payment of at least 25% of the property's value. Foreign residents may also need to provide a Credit Report.
The maximum loan-to-value ratio for mortgages in Israel is usually 75%, meaning you can borrow up to 75% of the property's value. Foreign Residents can typically borrow 50% of the property value.
As part of a new mortgage, Olim are eligible for a loan of up to two hundred thousand shekels. The Ministry of Housing is offering a loan with a maximum term of 30 years and interest rates that may be less than those of a bank mortgage. As part of our mortgage service, we assist our clients in making the most of all state benefits and give them the paperwork they need to apply for a state loan.
As a prerequisite for obtaining a mortgage, all prospective homeowners must show proof of a monthly income (whether earned in Israel or overseas, including investment income, etc.). Your ability to repay is determined by your monthly income, not by your personal assets or current property.
Your ability to repay is calculated by your net monthly income; the Bank of Israel caps the debt to income ratio at 40%. For instance, your monthly contribution should not be more than 4,000 shekels if you and your spouse have a joint net income of 10,000 shekels.
Israeli banks provide borrowers with a myriad of mortgage options to choose from so as to customize a plan that works best for you. Previously low rates meant that loans based on the prime rate and are limited to 66% of the loan amount in total. At least one-third of the mortgage must have a fixed interest rate. In order for you to select the best structure for you, we will outline all of the implications and show you the various options for structure.
There are two steps in the mortgage process:
The first takes place prior to signing the purchase agreement and entails submitting the necessary income data in order to seek for an application approval in principle.
Step two is completing all mortgage and collateral documentation to put a deed in place after you sign the contract.
The money will be transferred as soon as the mortgage file has been reviewed and approved.
It is highly advised that you wait to sign the purchase agreement until you have received final approval and that you retain legal counsel who will guide and assist you through the entire process of buying the property and securing the mortgage.
The interest rates for mortgages in Israel vary depending on market conditions and the type of mortgage being taken. Whilst many borrowers take a hybrid of mortgage products, we recommend consulting with us on an individual basis to get a package tailored to your needs. By shopping around on your behalf, we can secure you the lowest rate and overall repayment depending on your personal circumstances.
The repayment period for mortgages in Israel can vary, but it is common to have a maximum term of 30 years. Shorter terms are also available depending on the borrower's preferences and financial situation.
There are several advantages to using a mortgage broker in Israel:
1) Your own personal broker who speaks your language & better understands your needs.
2) Potentially save hundreds of thousands of shekels by having your own broker look out for your interests.
3) Reduce hassle, save time & get results.
