Israeli banks are still willing to issue loans for the purchase of real estate. Recently, conditions are becoming tougher, for example, interest rates are rising. Nevertheless, and this is especially important, borrowed money is available not only for citizens of the country, but also for foreigners.
Conditions for obtaining a loan for real estate
Until 2008, property prices in Israel were in place. And in 2008, when all over the world the banking sector and the real estate market “cracked at the seams”, the Israeli Central Bank lowered interest rates on loans.
First, developers began to actively take loans for construction, and investors – to massively buy housing for the subsequent lease. This provoked a continuous increase in prices, which lasted until 2016. It was then that the Israeli government began to take measures to cool the market, as the experts were already seriously talking about the appearance of a bubble. After all, in 2015, a record € 16 billion mortgage loans were issued in the country.
New housing taxes, as well as an increase in interest rates on loans, have been able to cool down the buying power. At the end of 2016, the volume of lending stopped growing, and in 2017, a decline in interest in applying for new loans was already recorded. Prices and sales of housing to foreigners also began to fall.
The largest banks in Israel: Bank Hapoalim, Bank Leumi, Israeli Bank “Discount”, Bank Mizrahi-Tefakhot, Bank Beinleumi
In Israel, a foreigner can apply for a home purchase loan, even without being in the country. Of course, in this case, an official representative of the borrower will be needed on the spot.
There are also disadvantages. For example, unlike citizens of a country, foreigners can rely on a loan with a maximum of 50% of the value of the object. For residents of the country, this level is much higher – up to 75%. Although, if a foreign borrower has deposits in Israeli banks, securities or other real estate, then you can get more – up to 60%.
Israeli banks are very serious about the solvency of borrowers. Strictly ensure that the monthly mortgage payments do not exceed one third of the borrower’s monthly income. Otherwise, the loan will not be approved.
For foreigners in Israel is available mortgage, which can be issued in any bank in the country, and another loan. As for the latter, this is a loan that can be taken in addition to the mortgage. But it is less profitable than a mortgage, due to higher rates – 5-12% per annum.
Typical conditions for mortgage lending to foreigners in Israel
|Loan currency||Israeli Shekel|
|Credit amount||50%, in some cases – 60%|
|Term mortgage||under 30|
|Borrower’s age||from 18 years old the extreme threshold is not indicated (individual conditions of the bank: the mortgage should be repaid by 75-80-85 years)|
|Loan repayment||monthly annuity payments|
Interest rates when buying property in Israel in the mortgage
Interest rates on mortgage programs are 2-4% per annum. But a lot depends on the credit history of a specific potential borrower. In some banks, rates can reach up to 7%.
Usually, the value of the rates is very dependent on the terms of the loan. The longer the loan term, the higher the rate, and vice versa. Also, do not forget that mortgages in Israel for repatriates, as well as for foreigners, are becoming more expensive in recent years. Therefore, we recommend that you always look at the latest data on loan rates.
In addition, the mortgage in Israel is differentiated. That is, the body of the loan is divided into at least three parts, each of which is tied to a specific anchor. This is a mandatory requirement of the Central Bank of the country. For example, a third is tied to a price index, a third to a dollar rate, a third to a currency basket. The loan can be divided into three unequal parts, for example, 40% – 40% -20%. For comparison, in Europe, a mortgage loan is tied to only one anchor – Euribore.
This means that in Israel the rate for each part of the loan is floating and will fluctuate depending on the changes in the anchor. That is, the value of the money that the bank provides to the borrower may, over time, decrease or, conversely, increase. So do not be surprised that the total loan amount will fluctuate. But monthly payments will remain fixed.
|Important to know ! In Russia, there is a tax on material benefits from savings on interest on a loan in a foreign bank. That is, if the interest rate on your loan abroad is significantly lower than the Russian, the difference will have to be reimbursed to the tax service. Read more here .|
Documents for registration of a mortgage in Israel
To get a mortgage loan for the purchase or construction of housing in Israel, the borrower must submit the following documents:
- Guarantors passports (if there are guarantors);
- certificate of income (2-NDFL), tax return for 2 years;
- certificate of title to real estate;
- if necessary, the notarized consent of the spouse of the seller to conclude a contract of sale ;
- certificates of ownership of other real estate and cars, evidence of additional rental income, shares, etc. ;
- cash flow statement
The last three points are optional, as banks may require additional documents, and may be limited to a standard set. It all depends on the requirements of a particular credit institution.
But what is the same for everyone is the rules for paperwork. They must be translated into Hebrew or English and notarized.
If there are no problems with the documents, and your creditworthiness does not cause doubts, the application will be encouraging in 1-2 weeks.
Additional costs for mortgages in Israel
Additional costs for obtaining a mortgage loan in Israel are small and usually do not exceed € 300. Much more serious costs – up to 15% of the value of the property will require the payment of tax on the purchase, and the realtor’s fee and a lawyer.
|Property Valuation||about € 150|
|Mortgage processing fee||up to € 15|
|Property insurance||€ 50-100 per year|
|Borrower’s life insurance||€ 50-100 per year (price depends on individual conditions, which depend on human health, so the figure may be higher)|
Want to buy property in Israel on credit? Companies – partners of the portal will pick up objects according to your requirements and advise on the issues of obtaining a mortgage.