If you are planning to buy a property in Israel, Israeli law firm in the US will advise you to apply for a mortgage before signing the purchase contract. The purchase contract for a property in Israel is final once it is signed. The banks will only approve the mortgage based on the appraised value of the property. Therefore, you need to appraise the property before signing the contract to determine how much money the bank is willing to lend.
How To Apply For The Mortgage?
For getting a mortgage in Israel, the buyer needs to prove his/her identity to the bank and also prove that he/she has the ability to repay the loan at the approved rate. Identification documents, recent payslips, recent tax returns, and recent bank statements are the major documents required to apply for a mortgage in Israel.
The buyer has to open a mortgage file in the bank. About 0.25% of the mortgage loan will be charged as the origination fee for opening the mortgage file. One important thing to note is that in most of the Israeli banks, Hebrew is the dominant language. Therefore, you have to bring a Hebrew speaker to the bank if you do not know the language.
How Much Money You Will Get?
An Israeli resident will get a higher mortgage from the bank than a non-Israeli resident. The bank can lend an Israeli buyer up to 75% of the purchase price of the apartment. This is only applicable to the first property. The bank can only lend 50% of the purchase price for a mortgage on the second property. On the other hand, the bank will only lend 50% of the purchase price of the property to a non-Israeli resident. However, the load can increase to 70% due to the additional types of loans.
Can You Take Out Mortgage In Israel In Dollars?
It is possible to take out mortgages in other currencies in Israel. The interest rate for the foreign currency-based mortgages in Israel is determined based on the London Inter-bank Offered Rate of that currency and the fixed premium set by the bank.
The main benefit of this type of mortgage is that the buyer can dodge inflation. Moreover, taking a loan in their own currency will give a sense of comfort to the foreign residents. However, if the NIS falls, the loan in foreign currencies will cost more.
You can always hire a real estate attorney to figure out the property laws in Israel.