Purchasing a home in Israel can be complicated.

The rules are different here at every level of the home purchasing process. There are many
hoops to go through before the home you choose is actually yours and you can move in!

Although traditionally mortgages in Israel are considered one of the many challenges of aliyah,
being informed can really help you stay on top of the game!

As a mortgage broker living in Beit Shemesh, I would like to reveal to you the WHAT, HOW and
WHEN of mortgages in Israel:

  • Know WHAT mortgages to ask for,
  • Know HOW to get the mortgage that is right for you,
  • Know WHEN to apply for the mortgage as part of the overall home purchase process.

So, let’s begin.


How much financing can I get for my home?
It depends on your status:

  • Are you an Israeli citizen and is this your first time purchasing a home ? If so, you can
    get 75% financing.
  • Are you an Israeli citizen and is this your second time purchasing a home? In this case,
    you can only receive 70% financing.
  • Are you trying to buy a second home (in addition to your first) or are you trying to buy a
    home in Israel but are NOT an Israeli citizen? The bank can only approve you for 50%.

The above is mandated by the Bank of Israel, and the banks are mandated to follow these
guidelines. In other words, you can’t negotiate to receive more financing.

But my neighbor told me that he got 90% financing and only had to put down
Several years ago, the Bank of Israel changed the rules as to how much money needs to be put
down at the time of purchase . Before this change one may have been able to purchase a home
by putting less money down. Unfortunately the rules are different now, and the above
information reflects the most up-to-date laws.

How much of a mortgage will the banks approve me for?
The banks want to see that your monthly mortgage payment will be ⅓ of your net monthly
income (i.e. the income after taxes). So if your monthly mortgage payment is 1,000 NIS, the
bank will want to see that you are making at least 3,000 NIS per month.

How can I figure out how much my monthly mortgage payment will be?
The following is a quick guide to estimating how much your mortgage payment would be for
every 1,000 NIS borrowed, based on your age.

  • Younger than 55 years old: 500 NIS/month (for a 25 year mortgage)
  • 55-60 years old: 600 NIS/month (for a 20 year mortgage)
  • 60-65 years old: 750 NIS/month (for a 15 year mortgage)
  • 65+: Email me your age at yireiss@gmail.com and I will calculate this for you.

What are the rates for mortgages in Israel at the moment?
There is no quick answer for this. Besides the rates changing constantly, mortgages are
structured differently in Israel, and you can even have 3 or 4 different tracks to your one
mortgage, each with different terms and a different rate.

Should I take a mortgage that is linked to the index (medad)?
There are many pitfalls to mortgages in Israel. This is one of them.
With a mortgage linked to the medad, after one year, you often end up OWING more money to
the bank than the amount you took out originally.
Don’t let the banks convince you to take a mortgage that is tied to the medad, even if the
mortgage looks attractive. Please be in touch if you need more convincing.


Can I just go to the bank where I usually “bank at” and take out a mortgage there?
The advantage of going to your current bank is that they may approve you more easily for a
However, each bank has different products that they offer and different rates between banks
can change drastically. As a mortgage broker, I am constantly having to check the pulse of the
mortgage market to figure out which banks to go to for my clients.
You should probably go to at least 3 or 4 different banks to see what each one has to offer and
compare your pre(-)approvals before making any final decisions.

Does it matter what currency my mortgage is in?
Yes, it matters.
If you make U.S. dollars, you should take a mortgage that is tied to the dollar so that your
monthly mortgage payment doesn’t fluctuate based on currency fluctuations.() If you shop
around, you can even find mortgages that are 100% tied to the dollar.
For all other currencies,ou are fine with a shekel mortgage.

Do I have to worry about a potential prepayment penalty?
Sometimes you will have a penalty if you want to pay your mortgage out? early.
You should ask the bank to structure your mortgage to reduce the risk of this as much as
If mortgage rates go down from the rate you received when you took out the mortgage,you
would face a prepayment penalty The penalty is determined by how many months are left on
the mortgage from the time you want to pay it off.

Why do people sometimes use mortgage brokers to get a mortgage?
Mortgage brokers usually charge their client a fee of 1% of the mortgage total to take care of all
the mortgage details.
It has become a common practice to use mortgage brokers in the past 10 years in Israel for
several reasons:

  • Mortgage brokers can usually get better rates than most people when going to the bank.
    The broker fee is significantly less than the amount of money saved by having a lower
    interest rate.
  • Mortgage brokers know all of the possibilities out there, and make sure to get the best
    mortgage to suit your needs The banks often try to get you the mortgage that is best for
  • Finally, mortgage brokers manage the bureaucracy before and after you sign for your
    home, saving you many, many trips to the banks and often much unnecessary confusion
    and stress.


At what point in the home buying process should I get approved for a mortgage?
You should get a mortgage pre-approval at the beginning of the home buying process. This will
let you know exactly how much you can afford before you go out to look for your new home.

Additionally, realtors will take you more seriously and show you the best homes first.
Finally, with a pre-approval, if you find a home that you like, you can bid on it immediately
because the financing is already all set up.

Can I sign for a home and take care of the mortgage stuff afterwards?
Unlike other countries, there is no mortgage contingency possible in contracts when buying a
home. That means that if you sign a contract, and then aren’t able to purchase the home
because you don’t get your mortgage approved by the bank, you will have to pay a fee to nullify
the contract.
I hope this content has served you well and helped point you in the right direction. Best of luck
in your home buying process.
If you would like to contact me with any additional questions or are interested in my mortgage
broker services, you can reach me at the email below.

Yisroel Reiss
For More Information Email: yireiss@gmail.com
Visit My Website: http://www.972mortgage.com/