Securing appropriate financing is often one of the more complex aspects of international property investment. Israel offers several options for foreign investors, though terms and availability differ from those offered to residents.
Israeli Mortgage Options for Foreign Investors
Israeli banks do provide mortgages to non-residents, though typically with more conservative terms:
Typical lending parameters:
- Loan-to-value (LTV) ratios generally capped at 50-60% for non-residents (compared to up to 75% for residents)
- Repayment periods usually 15-20 years maximum
- Interest rates approximately 1-2% higher than those offered to Israeli residents
Major banks offering foreign investor mortgages:
- Bank Leumi
- Bank Hapoalim
- Mizrahi-Tefahot Bank
- Israel Discount Bank
Alternative Financing Approaches
Many international investors explore financing options beyond traditional Israeli mortgages:
Home-country financing:
- Releasing equity from existing properties in your home country
- International banks with presence in both Israel and your home country
- Private banking arrangements for high-net-worth individuals
Developer financing:
- Some developers offer payment plans that reduce the need for large initial capital
- These arrangements typically involve higher overall costs but lower immediate cash requirements
Currency Considerations
Managing currency exchange adds another layer to financial planning:
Strategic approaches:
- Timing transfers to take advantage of favorable exchange rates
- Currency forward contracts to lock in rates for future payment stages
- Maintaining shekel-denominated accounts for rental income to reduce conversion costs
Payment Schedules for New Builds
Unlike purchasing existing properties, new builds typically involve staged payments:
Typical structure:
- 15-20% upon contract signing
- 20-25% when foundations are completed
- 20-25% when the frame is completed
- 15-20% when internal works begin
- 15-20% upon completion and handover
Tax Efficiency Strategies
Proper structuring can significantly impact the financial performance of your investment:
Considerations include:
- Whether to purchase as an individual or through a company structure
- Impact of any tax treaties between Israel and your home country
- Potential for reduced acquisition tax for first-time property buyers in Israel
