Your Israel Mortgage Questions & Answers
How much will I qualify for when applying for a mortgage?
Your monthly mortgage is based on your earnings and local Israeli banks will not allow you to take out a mortgage loan in excess of 40% of your monthly household income. So for example, if your household income is 10,000 shekels, your monthly mortgage payment cannot exceed 4,000 shekels per month. However there are certain instances where your total assets will be factored into the decision. It is best to consult with a mortgage bank before you sign a property purchases contract.
Are there fixed mortgage rates in Israel?
Yes. Fixed rates are available in both linked to inflation and not linked to inflation products. Prepayment penalties can be a factor when taking a fixed mortgage.
How much can I borrow?
Israeli citizens, first home-owners, can borrow up to 75% of the value of the property. If you are considering an Investment property. Israeli citizens are entitled to borrow up to 50% of the value of the property. Non-Israeli citizens are generally limited to 50%.
Is my mortgage tax deductible?
Israeli citizens are not entitled to a tax rebate on their mortgage. You may be entitled to a tax rebate in your country of origin if you are still filing a tax return there. Citizens of the United States are entitled to a deduction on their mortgage interest. It is best to consult with a local Israeli CPA who specializes in American tax laws.
How long does it take to obtain pre-approval - 'ishur ikroni' - on a mortgage?
The pre-approval does not take a long time to obtain. Generally it is just a few days from the time all the relevant paperwork has been submitted. You may even get the pre-approval within 24 hours of application.
How long does the mortgage process take?
Allow for 2 - 6 weeks from the time all the relevant documentation has been submitted
I have a lump sum, can I pay off my mortgage prior to the due date?
Consult with your mortgage bank and verify if there is a penalty clause in your mortgage contract.
Can I pay an additional amount every month to shorten the term of my loan?
This falls into the same category and a penalty clause may need to be paid.
Can I refinance my mortgage?
Should the need arise you can refinance your mortgage in Israel. You will have to pay administration fees.