Frequently Asked Questions

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Where can one go to obtain the best mortgage in Israel? Which is the best bank for this purpose?

There are currently 7 mortgage banks offering mortgages as well as a number of insurance companies and private lenders that also offer mortgages for properties in Israel. As of this writing, there are approximately 30 unique mortgage tracks offered between the various lenders. The type of mortgage and the terms of the mortgage (including interest rate) are constantly changing and vary depending on the applicant’s financial status as well as fluctuations in the financial market. IMC will help you navigate this complex variety of options and help you choose the one that works best for you.

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How much financing can I get to purchase a property in Israel?

Israeli banks are allowed to offer a mortgage of up to 75% of the value of a property to first time buyers and buyers that do not own any property in Israel. Buyers purchasing a second property as well as foreign residents are limited to an LTV (Loan To Value) ratio of 50%. Buyers that are selling a single property and buying a new property in its place are limited to an LTV ratio of 70%. In some situations, it is possible to get further financing and even reach levels of 85% through the secondary mortgage market. It is important to note that none of the lending bodies are required to offer the maximum LTV ratios allowed by the Bank of Israel.

 

Are foreign residents eligible for mortgages in Israel?

Yes. There are both banks and private lenders that offer mortgages to foreign residents. Each of these lenders has its own individual products and terms of the loan. The rates and service can vary greatly between different lenders.

How do banks calculate the percentage of financing?

The level of financing offered will be calculated based on the purchase price or the appraised value (must be a bank appointed Appraiser) of the property (the lower of the two).

 

What closing costs should be taken into account when buying a property in Israel?

The basic costs a buyer will need to cover when buying property are as follows:

• Legal fees – this is for the Lawyer that will represent you in the transaction and will generally range between 0.5%-1% of the purchase price + VAT.

• Purchase tax – the tax is calculated based on a bracket system and will vary based on the type of deal and the status of the buyer.

• Capital gains tax – this is only relevant if the buyer already owns a property in Israel and in many cases there may also

• Real Estate Agent fees – Not all deals are done through an Agent but if they are the standard fee charged is 2% of the purchase price + VAT.

• Appraisal fees – If done before the contract has been signed this fee will generally run between ₪2,500-₪3,500 + VAT. It’s important to note that some properties require more in-depth reports and the cost can also be as high as ₪10,000 + VAT.

• Listing fees and costs directly related to the mortgage process – this will usually be less than ₪1,000.

There are other costs that may be involved in specific deals but these are the more standard ones.