Finding the right financing

You come from abroad wanting to buy a house in Israel and you need a mortgage. What should you do? Read this article first.

By JOHN BENZAQUEN
October 1, 2007 11:27
1 minute read.
Finding the right financing

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It seems as though everyone wants a piece of the Holy Land. Local real estate is increasingly in demand as Jews from the US, UK, France and other countries snap up property in Israel. Many of these foreigners buy some of the very high end properties on the market: apartments worth over $1,000,000 and multi-million dollar single-family homes with gardens. As a result, prices are rising steeply. However, a demand also exists for less expensive real estate at prices affordable to average Israelis. Some potential overseas real estate buyers have the necessary funds to buy property outright, while others do not. There are still others who can afford to buy property, but do not want to see their money tied to brick and mortar and prefer to invest in a business venture which will yield more than interest rates will cost. These types of buyers want mortgages, and if they have good credit records, will attain them. American, British and other European banks would most likely refuse to offer credits using Israeli real estate as collateral, but Israeli banks are typically happy to oblige. Israeli clearing houses and mortgage banks frequently cater to the needs of overseas buyers; after all, a mortgage covered by property is the most secure credit that exists. Most banks tend to be willing to provide mortgages of up to 50% of the value of the property at interest rates which, on average, amount to 1.8% above the three-month LIBOR. Discount Mortgage Bank is especially active in this market. According to the bank's general manager, Anat Kenan, "In the past year [the bank] has been giving out 20-30 mortgages a month, and I believe this is around 50% of all mortgages provided to foreign buyers [in Israel]. Nearly all banks in Israel cater to the needs of overseas residents and to those foreign residents who want to buy property in Israel and finance a portion. The banks have special departments with multilingual staff and most put an emphasis on fast European-style personalized services."

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