Inflation Linked Mortgages – Beware!

published 08/18/23 by Norman Shapiro
With current mortgage rates relatively high, everyone is looking to find mortgage products that might ease the pain of high monthly payments. Inflation Linked Mortgage (ILM) products are often thought of as a good alternative with low rates and low monthly payments. But there is more to it than that. Much more. Let’s take a look at what is really involved with inflation linked mortgages.…

Understanding Mortgage Prepayment Penalties in Israel

published 08/11/23 by Norman Shapiro
If you have a mortgage or looked into getting a mortgage in Israel, you likely know that in Israel the banks may charge a fee in the event you pay off the mortgage before the end of the term of the mortgage. Misconceptions abound, and I would like to us this forum to help explain some of the parameters regarding prepayment penalties in Israel. Is…

Age and Its Impact on the Mortgage Process in Israel

published 07/31/23 by Norman Shapiro
When it comes to obtaining a mortgage in Israel, age may play a significant role in determining the terms and conditions of the loan. Banks have specific regulations and requirements in place to ensure that mortgages are manageable and paid off within a reasonable timeframe. In this article, we will explore how age influences the mortgage process in Israel and the implications it has on…

The Importance of an Appraisal Prior to Signing a Property Contract in Israel

published 06/12/23 by Norman Shapiro
Purchasing property is a significant financial decision, and conducting thorough due diligence is crucial for a successful transaction. In the context of real estate in Israel, obtaining an appraisal prior to signing a contract plays a vital role. This article aims to highlight the importance of appraisers in assisting buyers by establishing the true value of the property, identifying issues such as illegal construction and…

7 Unique Aspects of the Israeli Mortgage Market

published 04/02/23 by Norman Shapiro
Many of those looking to secure a mortgage on their property in Israel either currently live or have lived in a foreign country. While many aspects of the mortgage offerings, requirements and regulations are similar to other Western economies, there are several aspects of the Israeli mortgage landscape that are significantly different and the following is a review of some of the major distinctions. There…

Why Use a Mortgage Broker? (Part 6 of the Israel Mortgage Primer series)

published 07/25/22 by Norman Shapiro
If you’ve read through the first five parts of the Israel Mortgage Primer series, you should have a pretty good idea of what is involved in the mortgage process. We’ve reviewed what you need to know Before You Apply, the Documentation necessary for a mortgage approval, the various Mortgage Products available from Israeli banks, the Funding Requirements in order to get the mortgage funded  and…

Refinancing (Part 5 of an ongoing Israel Mortgage Primer series)

published 04/29/22 by Norman Shapiro
You own your property in Israel. You have a mortgage which seemed perfect at the time you financed the property, but times have changed. Interest rates may be lower, the variable rates that were attractive at the time you took the mortgage may now be significantly higher,  your financial picture may be different or you may have found that the terms of the current mortgage…

Funding Requirements (Part 4 of the Israel Mortgage primer series)

published 03/24/22 by Norman Shapiro
At this point, you have successfully traversed the application process (Before You Apply - Part 1), been approved for a mortgage (Documentation – Part 2) and chosen the mortgage products that best suit your needs (Mortgage Products – Part 3). In order for the mortgage to actually be funded, the banks have several requirements – which we discuss below. Property Appraisal As a general rule,…

Mortgage Products (Part 3 of the Israel Mortgage Primer series)

published 02/14/22 by Norman Shapiro
So, you’ve successfully traversed the application process and have been approved by the bank. One of the first major issues that you will have to ponder is the question of what product or blend of mortgage products is best suited for your particular situation. In this article, I’d like to review the main products that are available and the pros and cons of each. In…

Documentation (Part 2 of the Israel Mortgage Primer series)

published 01/19/22 by Norman Shapiro
In part 1 of this series we discussed when one should apply for a mortgage and the minimum criteria needed to qualify for a mortgage. See: Before you apply (Part 1 of the Israel Mortgage Primer series). In this installment, we delve into the documentation that lenders will require for the application process. What documentation will I need to prepare for approval? Lenders will minimally…

Going the Extra Mile: How a First Israel Mortgage Broker Made the Difference

published 01/19/22 by Norman Shapiro
A client came to First Israel Mortgages with the following situation; they purchased a property for a large sum of money two years ago. They were unable to obtain a mortgage at the time of the purchase, but the seller was willing to extend a ten-year payment plan. The terms of the plan included onerous interest rates and the buyer paying a rental fee until…

Housing Prices in Israel on the Rise

published 12/27/21 by Norman Shapiro
The price of residential real estate in Israel has risen by over 10% in the last 12 months, with steady increases forecast for the future. The major reason for this substantial price increase is higher demand that significantly exceeds the housing stock available. According to Israel’s Central Bureau of Statistics, the price of a typical 3 - 3.5 room apartment in Tel Aviv broke the…

Before You Apply for a Mortgage in Israel (Part 1 of the Israel Mortgage Primer series)

published 12/27/21 by Norman Shapiro
So, you’re ready to take the plunge. and…purchase a property in Israel. You know where you want to buy, how big a property you need and roughly how much it will cost. You also know you will need a mortgage to finance the purchase… and that’s where you start to get nervous. How much will I need to put down? What will I need to…

Number of Apartments Purchased by Foreign Nationals Rising

published 12/27/21 by Norman Shapiro
We are in the middle of a pandemic, and it’s been almost two years since foreign nationals have been freely able to visit Israel, making it very difficult for them to personally view properties prior to making a purchase. Despite the difficulties, foreigners purchasing property in Israel has reached record levels. Much of this growth can be attributed to: More people choosing to make Aliyah…

Can the new government slow rising housing prices? (Jerusalem Post article)

published 06/20/21 by Tzvi Shapiro
"The problem is a lack of supply in the housing market," said the co-founder of First Israel Mortgages. "The only way to bring down prices is to build more homes." By Zev Stub June 20, 2021 Jerusalem Post - original article here. Israel's housing prices continue to rise sharply, with no sign of slowing down. Last week, the Central Bureau of Statistics reported that average home prices…

Overseas demand for Israeli homes rising ‘through the roof’ (Jerusalem Post article)

published 06/20/21 by Tzvi Shapiro
"While American Jews once looked at having a home in Israel as luxury, or a nice thing to have for the holidays, it is now seen as a necessity for those who can afford to purchase one," Shapiro said. By Zev Stub March 11, 2021 20:58 Original Jerusalem Post article here. Demand for Israeli homes from overseas buyers has gone “through the roof,” said Tzvi…

From “No” to “Yes”: Getting a Mortgage in Israel with US Trust Income

published 05/14/18 by Moises Zack
Helping clients acquire a good mortgage in Israel often feels like solving a mystery. Dealing with the bureaucratic hurdles from Israeli banks, compliance issues from the Bank of Israel, making sure lawyers and property appraisers are on the same page, there is always a cast of characters involved in the plot. Our job is to work with all these players to help our client get…

Creative Solutions for a Mortgage Down Payment

published 03/20/18 by Moises Zack
Getting turned down by multiple banks when seeking a mortgage in Israel can be an incredibly frustrating experience. We recently had a well-qualified client approach us seeking a mortgage in order to purchase a property here in Israel for 2 million US dollars. According to Bank of Israel’s regulations, the maximum amount a bank can fund through a mortgage for Israeli residents is 75%. My…

How is your relationship with your Bank in Israel?

published 03/04/18 by Tzvi Shapiro
People who have great relationships with their bank often think they are getting the best financing deals available on the market. Take for instance the story that recently came through our office. A wealthy gentleman here in Israel purchased a second property for $4.2 Million and applied for a mortgage with his bank. He was one of their high net worth clients and a very…

The biggest mistake when negotiating a purchase on property in Israel – and how you can avoid it

published 01/28/18 by Dani Schecter
Caution: Know this before negotiating on property being purchased second-hand, while still under construction by a developer, in Israel. You might think real estate mortgages in Israel is a boring topic, but actually, every day is an adventure. We recently did damage control on a case where countless hours of negotiations, paperwork, lawyers fees, appraisal fees, time invested by the buyer, seller, and real estate…

Moshe Kahlon and his Army of Landlords

published 09/10/17 by Tzvi Shapiro
Moshe Kahlon doubled down on his “Buyer’s Price” program which aims to turn thousands of young Israeli couples into landlords homeowners by announcing that the program will extend until the end of 2019. Speaking at the International Economic Forum hosted by Calcalist in Tel-Aviv the Minister of Interior said “those who are attacking the program aren’t attacking me… they are attacking the young couples and…

Aliya: When to take your mortgage in Israel

published 07/17/17 by Tzvi Shapiro
If you are planning on making Aliya and buying a home in Israel, it is important to consider when to take out your mortgage – either before or after making Aliya. There are advantages and disadvantages to each option, below are a few of the main points to consider: Taking a mortgage prior to making Aliya: Advantages Ability to take the entire mortgage without a…

Knesset backs Mortgage Brokers in Israel

published 06/06/17 by Chaim Friedman
Mortgage brokers in Israel got a big win last week from the Antitrust authority and the Knesset Finance Committee. In the wake of the recent 2% spike in interest rates despite benchmark interest rates holding steady, the Antitrust authority launched an investigation into mortgage banks’ pricing practices. Advocate Michal Halperin, the leader of the investigation, reported: “There is no indication that the banks engaged in…

The bank is changing my interest rate?!

published 05/16/17 by Dani Schecter
This is one of those stories that seems to repeat itself time and time again... Mr. Cohen, a former colleague of mine at First Meridian Mortgage in New York, had waited a long time to be able to purchase a property in Israel. He and his family have been coming to Israel a few times a year on vacation for a number of years and…

Mortgage in 16 Days @2.4%: A Timeline

published 03/10/17 by Chaim Friedman
February 21: Application received. The first thing I did was review the contract. The funds were needed on March 1 and there was only a 7 day grace period! I immediately called the client and told him my feelings regarding the timeframe. “We had a disagreement with the seller which held things up. Do your best”, he said. “We must try and get it done…

Mortgage in Israel: Saving $500,000

published 02/20/17 by Chaim Friedman
I wanted to share a recent deal we closed: Apartment price: $4,470,000 Offer secured through a different broker: Loan amount: 8,500,000 NIS or 50% LTV - appraisal subject to review Rate: 4.41% Life insurance: required Conversion fee to USD: $25,000 Our offer: Rate: 3.58% Loan amount: $2,235,000 -no review of appraisal required Life insurance: waived Conversion fee: $0 Total savings over the life of the loan:…

Mortgage in Israel: Low interest rates = High mortgage rates?

published 02/08/17 by Tzvi Shapiro
When I saw my phone buzz at 5:30AM I knew it could only be one person. My client living in Singapore waiting to discuss a six million NIS approval was the only person who texts me at that time. Given than my wife had recently given birth to twins boys I happened to be up. “Six million NIS has been approved”, I wrote to him…

The beginning of the end of the housing crisis?

published 12/05/16 by Tzvi Shapiro
The big news in Israeli real estate over the last decade has been the ever-increasing price of home ownership. Since May 2007 average home prices have risen by 108% while in areas such as Tel Aviv the rise has been even steeper. This has been attributed to increased demand due to factors including low interest rates and advantageous tax rules and decreased supply due to…

“What’s the rate?”

published 12/02/16 by Tzvi Shapiro
As mortgage brokers, “What interest rate can you offer?” is the question we most commonly hear from our clients – and we can understand why. Prospective borrowers from most Western countries are accustomed to certain norms in the mortgage market such as financing only being offered in the local currency and standardized conditions amongst lenders. However, in Israel there are significant differences amongst the lenders…

Top 5 mortgage tips and tricks

published 11/03/16 by Tzvi Shapiro
With the lack of transparency in the mortgage market in Israel one is likely to encounter misinformation and unnecessary “red-tape” when exploring financing options. As each of the banks in Israel have their own lending parameters we decided to share our favorite mortgage tips to make your home financing needs a reality: 1) No life insurance required Traditionally, banks in Israel have required that the…

Affordable Housing for all?

published 10/03/16 by Tzvi Shapiro
We have all heard it before: The price of apartments in Israel never seems to drop. Lately, Moshe Kahlon and Yoav Galant from the Kulanu party have staked their entire political reputation on increasing the affordability of apartments. Their solution: Mechir L’mishtaken, a program where the government auctions off land at a significant discount to developers willing to guarantee a cheaper-priced final apartment to eligible purchasers. In…

Three Mortgage Strategies to save money

published 09/03/16 by Tzvi Shapiro
1) Mix up your mortgage product term length: Fixed rate loans are cheaper the shorter the duration, while adjustable rate loans are typically the same rate - regardless of the term. If you plan to take a 20 year term comprising of both fixed and variable rates (short-term variable rate loans have no pre-payment penalty), take a 15 year fixed on 70% of the loan and a…

The cost of living in Israel

published 03/16/15 by Tzvi Shapiro
The "expense chart" of a married man and father of four which outlines basic family expenses of more than 26,000 NIS monthly and exemplifies how even Israeli earners in the top 10 percentile are deteriorating into overdraft and financial trouble. The social protests, which started with cottage cheese and Facebook and continues with the “tent protests “ on Rothschild boulevard is gaining new strength every…

Put your trust in property – but put your property in trust

published 12/16/13 by Tzvi Shapiro
The (slightly misquoted) saying of Oliver Wendell Holmes in the headline precisely reflects the opportunity afforded to foreigners who are buying properties in Israel, which is due to the mini-reform of the trust legislation in this country. But what is a trust, and why would you need one to buy a home in Israel? A trust is the relationship whereby property is held by one…

“Mr. Fischer: Let the people refinance”

published 12/16/13 by Tzvi Shapiro
An economic slowdown in Israel combined with a steadily appreciating Shekel have prompted the Bank of Israel to lower interest rates four times in the last twelve months in an attempt to stimulate the economy and weaken the Shekel. However, the Bank of Israel has clearly stated that the moves are not intended to boost the housing market. The Bank of Israel cited the slowing…

Abandoned Aliya: Don’t blame a missing house

published 12/16/13 by Tzvi Shapiro
This article was printed in the "Op-Ed Contributors" section of the Jpost.com 9/16/2013 Abandoning the life-long dream of aliya is an over-reaction to very real, sometimes foreboding problems. In her thought-provoking column last week, Adina Siperman raises genuine challenges while announcing her family’s termination of their aliya dream. The main obstacle, she wrote, was that she didn’t see a pathway to buying a home in…

Monitors and Mortgages

published 12/19/12 by Tzvi Shapiro
[caption id="attachment_123" align="alignleft" width="300"] Where First Israel Mortgages sits to get the job done.[/caption] More often than not, “simple” choices aren’t as simple as they seem. Having opened up our second location on King George Street, one of the busiest streets in Jerusalem, we felt it would be a good idea to install flat screen monitors in our window displaying current mortgage rates and terms.…

Fischer signals tougher measures to limit mortgages

published 12/27/11 by Tzvi Shapiro
Measures taken so far to limit mortgages were a first step and relatively moderate, says the Bank of Israel in excepts published today on macroprudential policy that will appear in its Annual Report, which will be published on March 30. The Bank of Israel says, "During 2010, the Supervisor of Banks announced a series of steps in the housing credit market, that were directed at a…

Inflation and your Mortgage in Israel

published 12/27/11 by Tzvi Shapiro
Consumer inflation figures in Israel are out and they are not pretty. Inflation has risen 4.2% in Israel over the last 12 months-way above the Bank of Israel’s comfort range of 1-3%. The news is prompting many analysts to raise their forecasts for short-term interest rates. Forecasters now predict the Bank of Israel Prime rate will jump to 5.5% by year’s end and 6.5% by…

Israel Mortgage Rate Update

published 12/16/11 by Tzvi Shapiro
For those borrowers looking for US Dollar based loans, LIBOR loans are now available for foreigners as low as LIBOR+1.8% on the ENTIRE loan amount. Being able to take the entirety of the loan in a variable rate represents a tremendous benefit, as most lenders are unable to provide more than 1/3 of the loan in a variable rate. This option is available up to…

Say “NO” to a Zichron Dvarim

published 12/16/11 by Tzvi Shapiro
Imagine it is the last day of your short trip to Israel. Finally, you see that dream apartment you were looking for; perhaps a penthouse with a view of the sea. It might even have a winding staircase and a guestroom on the roof with the perfect rooftop terrace. The seller or agent suggests that you sign a Zichron Devarim and pay a small deposit…

Can’t find an apartment? How about a tent?

published 12/16/11 by Tzvi Shapiro
When I moved to Israel in 1995, many of my friends asked me if we would get around by car or by camel, if we would have bathrooms or outhouses and if we would live in a house or in tent. Having laughed at them for their ignorant questions, little did I know that in 2011 many Israelis would be taking to the streets and…

Impressive Gains for Israeli Real Estate Stock (REIT)

published 12/14/11 by Tzvi Shapiro
When it comes to Israeli real estate investments, few people realize they can diversify their holdings by investing in an Israeli REIT stock. The gains have been substantial from this form of investment, which also has a low barrier of entry and a high degree of liquidity. If you have some money you want to invest in Israeli real estate, you might consider Israel’s “REIT 1″…

Jerusalem: A Consistently Booming Real-Estate Market

published 12/14/11 by Tzvi Shapiro
The global economic crisis of recent years is leaving its mark on the Jerusalem real estate market in more ways than one. Foreign buyers are taking more time to buy into the property market, but they are still here and want to find their "home" in the "Jerusalem of Gold", while local purchasers appear to be benefiting from the weak US currency. Despite this, current…

Subprime in Israel?

published 12/13/11 by Tzvi Shapiro
Subprime. It's notoriety prevails throughout the world. The word alone conjures up vivid memories of recession, ruined investors, and failed banks. With the financial crisis in the United States allegedly over, the question for us begs, does subprime lending exist in Israel? Can history repeat itself here? This question was posed to the Head of Retail Banking at Bank Mizrachi-Tefachot in an interview. His response:…

Bank of Israel to keep buying forex

published 12/10/11 by Tzvi Shapiro
Central bank's governor says will continue to intervene in foreign exchange market to ensure Israeli exports remain competitive Israel's central bank will continue to intervene in the foreign exchange market to ensure Israeli exports remain competitive, Bank of Israel Governor Stanley Fischer said on Monday. Contradictory policies? Some analysts have questioned whether Fischer can continue contradictory policies of buying foreign currency while also raising interest…

Government Steps in to Lower Property Prices

published 12/09/11 by Tzvi Shapiro
For many young couples beginning their lives together, as well as for other families, the dream of buying a home has become a dream that is difficult to achieve. Notwithstanding the usual dilemmas such as location, size and other parameters, the issue of financing poses an even more daunting prospect. In fact, the financial aspect is the most vital element of all since it affects…

Israel: The fastest growing real-estate market in the world

published 12/09/11 by Tzvi Shapiro
Today as much as ever the number of people purchasing investment properties in Israel continues to rise. Even following the world’s economic collapse Israel has been confirmed as the fastest growing real-estate market in the world. For those contemplating investing in Israeli property the following will be of interest: The cities showing the highest annual rates of return are not Tel Aviv, Herzliya and Jerusalem…

Israeli Credit Rating May Be Cut by S&P in Line With U.S. Action

published 12/07/11 by Tzvi Shapiro
Israel may have its AAA credit rating on U.S.-guaranteed sovereign bonds cut by Standard & Poor’s Ratings Service in line with a similar action it has warned of taking on U.S. debt. S&P put Israel’s rating on “CreditWatch” today, meaning there is a 50 percent chance it may be cut in the next 90 days. It said the action should have been taken July 14…

Living the High-Life in Herzliya-Pituach

published 12/21/10 by Tzvi Shapiro
Herzliya-Pituach is highly regarded as one of the most luxurious areas in all of Israel. This centrally located town built on the beaches of the Mediterranean is situated between Kvish Hachof (the coastal highway) on the west and the neighborhood of Nof Yam on the north. This beautiful town was once known as the “Rivlin” neighborhood named after the famed businessman and real estate developer…

Red, Hot and Blue

published 12/21/10 by Tzvi Shapiro
The Israeli mortgage banking industry is in the midst of unprecedented times. The Bank of Israel, faced with a soaring real estate market and a steadily appreciating shekel, has found it tough to strike a balance between its attempt to dampen speculation in the red-hot real estate market and keep a stable exchange rate. How hot is the market? According to the Bank of Israel,…

10 Commandments when Buying Pre-Owned Real Estate in Israel

published 12/21/10 by Tzvi Shapiro
It is such an exciting time in life when one can finally realize the dream of purchasing real estate in Israel. Whether it is a first home, second home or vacation property, the rule of buyer beware applies. As with all things in life, you must enter this process with eyes wide open and be prepared to scrutinize every minute detail. The following article outlines…

Mortgage Interest Rates Hit Historic Low

published 12/21/10 by Tzvi Shapiro
Two articles from Globes below, showcase how mortgage interest rates have hit a historic low in recent weeks... The Bank of Israel reports that the average mortgage interest rate fell to a historic low of 2.18% in October from 2.2% in September. The Bank of Israel's new guidelines on mortgage terms, aimed at raising mortgage costs, will come into effect shortly. The average mortgage interest rate…