Here is a great article from First Israel Mortgage to help you with all your questions regarding your home purchase. Be sure to check out our “Hot Properties” pages for the latest listings in northern Israel.
How much will I qualify for when applying for a mortgage?
Israeli banks qualify borrowers according to their earnings. The debt to income ratio cannot exceed 40%. This means that a household that is earning 20,000 NIS per month net cannot have monthly mortgage payments in excess of 8,000 NIS per month. In certain instances total assets and liabilities can play a deciding role as well. For these reasons it is advisable to apply for a pre-approval prior to signing a purchase contract for a property in Israel.
Are there fixed rates in Israel?
Yes. Fixed rates are available in both linked to inflation and not linked to inflation products. Prepayment penalties can be a factor when taking a fixed mortgage. It is best to discuss this option with a qualified mortgage professional to understand the benefits and risks involved.
How much financing will the bank provide me?
Israeli citizens are eligible to borrow up to 75% of the value of the property, if it is their first home. Investment properties for Israeli citizens are limited to 50%. Non-Israeli citizens are generally limited to 50% however 65% is possible.
Is my mortgage tax deductible?
For Israeli citizens filing taxes in Israel, mortgage interest is not yet tax deductible. However, United States citizens may deduct mortgage interest paid on their home in Israel from their U.S tax returns, provided they itemize the deductions on Schedule A.
How long does it take to obtain an “ishur ikroni” (pre-approval)?
From the time ones documentation is received, pre-approvals can be obtained in a matter of days, often times even within 24 hours.
How long does the mortgage process take?
From the time your documentation is received, the process can take between 2 to 6 weeks to close your mortgage, depending on the complexity of the situation.
Will taking a mortgage in Israel affect my credit in the United States?
No. Mortgages and other credit extended in Israel are not reported to the U.S.credit bureaus.
Can I go into an Israeli bank branch in the U.S. to submit paperwork for my mortgage in Israel?
Typically, no. Israeli bank branches in the U.S. are often separate corporations from the ones in Israel and generally do not correspond with each other very smoothly.
Can I refinance a mortgage taken in Israel?
Yes. Refinancing in Israel entails low fees and no additional taxes. It is important to note however that there are pre-payment penalties on certain types of loans that must be considered.
Can I pay an additional amount every month to shorten the term of my loan?
Banks in Israel sometimes charge a pre-payment penalty and many do not accept payments of less than 10% of the amount of money owed. Additionally, the payment reduces monthly payments, but leaves the term the same. For this reason, it is advisable to initially structure the loan to meet your needs.
English – Hebrew Useful Terminology
|Approval||Ishur Ikroni||אישור עיקרוני|
|Purchase tax||Mas rechisha||מס רכישה|
|Cash out loan||Halva’a LeKol Matara||הלוואה לכל מטרה|