Frequently Asked Questions (FAQs)

Start here to find the answers to your frequently asked questions about banking products and services in Israel. Click on the questions below to reveal the answers.

If you can't find your question below then please email us your question using the form opposite. 

Buying Property in Israel

 

Do I need an attorney / Lawyer in Israel?

We strongly recommend using the services of a lawyer when buying a property in Israel. The purchase of real estate is one of the most significant transactions that individuals make and it is important to ensure that all aspects are properly checked. Legal regulations, terms and practice will differ from your country of origin, and so a lawyer will ensure that your purchase is performed properly.

In addition, you may want your lawyer to sign the purchase contract and mortgage document on your behalf. If so, (s)he will need to have a suitable power of attorney which has been prepared specifically for this transaction. Bank Mizrahi Tefahot can provide you with a suitable power of attorney.

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Can I apply for a loan before I find a property to purchase?

We recommend applying for pre-approval for a loan before committing yourself to a purchase. Such approval will enable you to know your total budget for your purchase, and how much you will need to repay on your loan. This approval in no way obligates you to take the loan. The pre-approval can often be received very quickly, and will normally be dependent on providing adequate financial information, a signed purchase contract and a property appraisal.

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What is Vaad HaBayit?

The term "Vaad HaBayit" actually means "House Committee". Apartment buildings will normally include one or more resident who is responsible for the maintenance of the common parts of the building (elevator, gardens, stairwell etc.). The residents of the building will pay a monthly fee to cover the cost of this maintenance. In larger buildings, the job of maintaining the common parts may be delegated to a managing company. This may well cause a substantial increase in the monthly fee. This payment is commonly called the "Vaad HaBayit" and should be taken into account when considering buying or renting an apartment.

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Can a non-Israeli buy property in Israel?

Certainly. In recent years many non-Israelis have bought properties in Israel. These properties are bought for a number of reasons, including for vacation homes and for investment purposes. The property is recorded according to the name and current passport number of the purchaser(s), which may need updating when the passport is renewed.

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How much deposit do I need to get a mortgage in Israel?

Non Israelis are required to pay at least 50% of the property value from their own funds. They may be able to get the remainder of the funds as a mortgage.

This amount should not be confused with the deposit or initial payment made to the seller of a property. The amount of this initial payment is negotiated by the buyer and the seller.

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What are the types of mortgages in Israel?

Israeli banks give 3 main types of mortgages:

  • Loans linked to the rate of inflation (CPI). The amount of the loan and the monthly repayments are adjusted along with the changes in the CPI.
  • Loans linked to the US Dollar or the Euro. The amount of the loan and the monthly repayments are adjusted along with the changes in the Shekel exchange rate.
  • Unlinked loans. These loans can bear either fixed or variable interest.

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What does 4 rooms mean in Israel?

A 4 room apartment includes 3 bedrooms and a living room, as well as a kitchen and bathroom(s).

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Can I rent out a property even if I don't live in Israel?

Definitely. Many properties are bought by non-Israelis for investment purposes and are rented out, either short or long term. It may be advisable to appoint a local agent to be responsible for repairs to the property and finding tenants. The tax implications of renting out a property should also be considered.

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How do I know if the asking price is reasonable?

Some purchasers pay for an appraiser to give his opinion on the value of the apartment before signing a binding purchase contract. This will give peace of mind that the asking price reflects market conditions. There are a number of websites that also provide valuation services, with varying degrees of accuracy. We recommend checking the website of Mizrahi Tefahot Bank (nadlan.tefahot.co.il).

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How long does the typical home buying process take in Israel?

The length of the process may well depend on whether the property being bought is first hand (i.e. a new build) or second hand.

New builds can be handed over to the purchaser up to 3 years from the date of signing the purchase contract. The timetable of payments forms part of the purchase contract and is normally linked to the progress of the construction. Compensation is normally paid when the date of completion is over 3 months from the date agreed in the contract.

The length of time for completing the purchase of a second hand apartment is agreed between the buyer and the seller. Commonly, a seller may request a delay in handing over the apartment for a few months to enable him to find alternative accommodation. A purchaser may also be prepared to delay the completion of the transaction to enable him to sell his current home. The dates of all payments and handover dates should be clearly stated in the purchase contract.

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Where do communities of English / French / South Africans etc. live in Israel?

Israelis originating from Britain, the USA, France and South Africa can be found in every place in Israel. There is however a tendency for English speakers (aka Anglo Saxons) and French speakers to build communities together. There are successful Anglo Saxon communities in several neighborhoods of Jerusalem, Raanana, Bet Shemesh and Netanya. In addition to south Jerusalem, the French communities are largely based along the coast in Netanya and Ashdod.

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How long does the typical home buying process take in Israel?

The length of the process may well depend on whether the property being bought is first hand (i.e. a new build) or second hand.

Recording an apartment in Israel in the name of the purchasers can be complicated and so there is no standard process.

New builds can be handed over to the purchaser up to 3 years from the date of signing the purchase contract. The timetable of payments forms part of the purchase contract and is normally linked to the progress of the construction. Compensation is normally paid when the date of completion is over 2 months from the date agreed in the contract.

The length of time for completing the purchase of a second hand apartment is agreed between the buyer and the seller. Commonly, a seller may request a delay in handing over the apartment for a few months to enable him to find alternative accommodation. A purchaser may also be prepared to delay the completion of the transaction to enable him to sell his current home. The dates of all payments and handover dates should be clearly stated in the purchase contract.

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I am retired and my income is from a retirement program or Social Security. What do I need to provide when applying?

All borrowers are required to produce proof of income. If your income is from a pension, then the bank will want to see a statement from the pension fund, bank statements showing the receipt of the pension and a tax return if applicable.  Please be aware that the bank normally requires all loans to be repaid by the time the youngest borrower has reached the age of 75.

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How is rental income verified?

Borrowers receiving rental income will normally be asked to produce a copy of the rental contract and bank statements showing the receipt of the monies. Such income may also be shown on the tax return if that is provided.

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I have income from dividends and/or interest. What documents do I need to provide?

Such income should normally appear on your tax return. If you do not provide a tax return, then the bank or other financial body paying the interest should be able to provide a statement detailing the amount paid.

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