In Israel FAQ
Below you'll find the answers to the questions we get asked most about applying for mortgages in Israel
*Answers are according to 2021's updated rules and regulations
For further questions contact: Moises Zack, Senior Consultant - First Israel Mortgages
www.firstisrael.com | firstname.lastname@example.org | +972 (0) 54-3971-901
Frequently Asked Questions
How are mortgages in Israel different from mortgages in the USA?
There are many differences between borrowing in Israel and borrowing in the states. First off, in Israel banks discriminate based on age. This results in most banks requiring that the loan fully amortizes by 80-85 years of age. Secondly, the banks in Israel typically require a life insurance policy covering the loan amount for the duration of the loan, whereas in the US that is not required. In spite of this, it is possible to obtain a waiver on this requirement or to assign an existing policy from abroad. Lastly, in Israel, you can mix and match different types of mortgage products and terms which is not the case in the states since your entire mortgage must be on one mortgage product.
How much can I borrow?
It depends on the residency of the borrowers. Bank of Israel’s regulations states that an Israeli resident (not necessarily a citizen) who is purchasing their first property can borrow up to 75% Loan To Value (LTV). A foreign resident can borrow up to 50% LTV. However, there are mortgage products available for foreign residents which allow for LTVs as high as 70% - the last 20% of which can fund immediately after the purchase is completed.
How is my residency determined?
It is purely dependent on how the purchase tax declaration will be made. This is something that your lawyer deals with, so we strongly recommend speaking with your lawyer about this particular subject.
What is the average loan period on a mortgage in Israel?
Mortgages are available up to a 30-year term in Israel. However as mentioned previously, Israeli banks will discriminate based on the age of the borrowers. Banks will typically prefer for the loan to fully amortize by the time the borrowers reach 80-85 years of age. Although there can be exceptions to this rule, it is much harder to attain mortgage loans outside of this standard.
Do I qualify for a mortgage on foreign-based income?
Yes. To qualify for a mortgage in Israel, your monthly mortgage payment cannot be greater than 40% DTI (Debt To Income ratio) of your net monthly income. Although It is much easier for banks to qualify borrowers based on Israeli income, there are banks that are able to qualify borrowers based on foreign income.
What are the mortgage rates in Israel?
Do I need to be in Israel to obtain a mortgage?
How long does it take to get approved for a mortgage?
What do I need to know about life insurance in regards to mortgages?
Generally, the banks require the borrowers to have a life insurance policy covering the loan amount and the term of the loan. There are banks that allow you to assign a foreign policy. Depending on the situation and the ages of the borrowers sometimes a partial waiver or full waiver can be obtained.
Are there mortgage products available other than in Shekel?
Yes. There are numerous currencies one can borrow. However, the structure of the loan must comply with the Bank Of Israel guidelines mentioned above. The main currencies available are USD, GBP, and Euro.
Can one use a foreign co-borrower?
What documentation is required of the borrowers to submit for a mortgage?