Taking a mortgage in Israel when living abroad
Posted on 12. May, 2010 by buyitinisrael in Mortgages
©iStockphoto.com/Nathan Maxfield
By Saul Kramer
Whether you are an Israeli citizen or a non-resident living abroad, it may possible to get a mortgage for a property in Israel. Buyers of Israel real estate from the US, UK, Canada, Europe, Australia, South Africa and as far as the Philippines have succeeded in taking mortgages in Israel without having to set foot here. This article will briefly outline the requirements and the process, and also offer and some advice.
Israeli banks will typically lend up to 70% of the value of a property. In order to get pre qualified the banks want to see the following documents from the lender/s:
- Last two years’ tax return – if the recent years’ tax return has not been filed yet, some banks will accept an accountant’s letter stating that year’s income
- Last three month’s current account statements
- Two forms of identification (Passport and driver’s license)
- Credit score – Most banks require this for US and UK citizens only (A credit score can be obtained online via websites such as Experian or Transunion)
The banks are basically checking to see that the lenders’ income (after taxes and other debts) is strong enough to support the mortgage in Israel. As a general guideline, they want to see that the net monthly income is around three times the monthly mortgage payments.
So for example, you are buying a property for US$600,000 in Israel and require a US$420,000 mortgage (70%), your monthly income would need to be around US$6,500 (after tax and other debt) to be pre qualified for a twenty year mortgage.
Now having discussed these brief technical requirements for getting pre approval, how can a client practically go about getting pre approval and signing the loan documents?
Some Israeli mortgage banks have international departments offering services to overseas clients. Several of these banks even have branches in the US and UK and provide financial services for their local clients. However, often the rates and terms offered are less attractive than working with local branches in Israel.
A good alternative is to hire professional mortgage broker in Israel. The added value that he/she can offer may include:
- Independent advice regarding the different types of loans available in Israel, making sure that the clients structure the mortgage to best suit their needs
- Providing the service of making the application and liaising between the client and the bank to get all the necessary documentation in place.
- Negotiating the best rates and terms for the required mortgage.
If clients are not able to travel to Israel to sign the loan documents, there are a couple of options available which will ultimately depend on the bank used. These include signing documents at the closest Israeli consulate or the international branch of the bank used.
The most advisable method is to appoint a power of attorney in Israel to sign all the documents. Appointing a power of attorney also requires a visit to the Israeli consulate or a public notary who is able to get an apostil on the bank documents.
While this is all true for a new mortgage in Israel, the same applies for refinancing an existing loan in Israel when living abroad.
The Israel mortgage process should not be feared because of unfamiliarity with how things are done in Israel. On the contrary, interest rates are at historically low levels and Israeli banks are usually willing to lend money once they have determined that the lender for Israel real estate fits their profile.
Saul Kramer is an Israel Mortgage Consultant at Blue Crown Capital. He can be reached at +972 54 4904249 or by email at saul.kramer@bluecrowncapital.com.
The contents of this article are designed to provide the reader with general information and not to serve as legal or other professional advice for a particular transaction. Readers are advised to obtain advice from qualified professionals prior to entering into any transaction.
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