So you’ve made the decision to buy property in Israel and you’re talking with a realtor to help you find the right property. You see several apartments and the one near Emek Rephaim is exactly what you want. You’re ready to purchase when your realtor explains there is no mortgage contingency. When you bought your home in Englewood you had a preapproval letter but the contract permitted an out if you couldn’t get a mortgage. You now realize you need a “real” approval before you sign this contract and risk losing the deposit. You lose the apartment.
As a previous homebuyer in the United States, you have a basic understanding of the U.S. mortgage process. As they say, a little knowledge can be dangerous. In fact, the Israel mortgage process has many differences from the U.S. process which can put the typical U.S. buyer at risk when navigating the Israeli system. Here are some areas to be aware of:
No Mortgage Contingency. If you can’t secure a mortgage you need to either close with cash or you could lose some or all of your initial down payment.
Prepayment Penalties. Unlike U.S. residential loans, under certain circumstance you may pay a penalty if you pay a portion of the principal due.
Down Payment Requirements. Foreign buyers are generally limited to 50% bank financing. There may be options for increased financing.
Age Limitations. Loan terms generally require that the loan be fully amortized by the time the borrower is age 85.
Currency Related Options. Various options include principal tied to the shekel or to the U.S. currency.
Insurance Requirements. Generally speaking, the banks require a life insurance policy to cover the mortgage principal. We are often able to obtain waivers of this requirement for clients.
First Israel Mortgages funds close to NIS 1 billion per year, making it one of the largest mortgage brokers in Israel. Working with all major Israel banks, they provide access to the best options for purchases and the ability to get buyers the best pricing. Their expertise helps buyers navigate the Israeli process avoiding the pitfalls that so many foreign buyers experience. First Israel Mortgage is available to help buyers through the process. David Siegel is the U.S. representative for First Israel Mortgages and available to meet with prospective buyers to discuss their options as the team in Israel gets the loan negotiated, processed and closed.
First Israel Mortgage will be hosting a webinar series soon to help explain the issues which buyers need to know. Please contact Siegel for date information at (201) 725-9527 or [email protected]
David Siegel is a senior mortgage broker with First Israel Mortgages. He can be contacted at (201) 725-9527/[email protected].
