The Guide to Getting a Mortgage in Jerusalem

The banks in Jerusalem offer friendly mortgage policies that make obtaining a loan simple and easy. However, some aspects of the mortgage can be confusing – especially for new immigrants and foreign investors.

For example, the banks here offer a variety of mortgage schemes. Each of these mortgage types caters to the requirements of different clientele. Factors include the client’s economic standing, currency of income, financial goals, place of residency and other personal considerations.

So, which is the best choice for you when you buy Jerusalem property? Here is an overview of the vairous options:

Dollar Linked – This means that payments can increase or decrease according to the fluctuations of the dollar/shekel rate. Though the terms are determined by the value of dollar, payments are made in shekels. Euro linked mortgage is also available in Jerusalem banks. This option is recommended for those who have income linked to the Dollar or Euro.

Shekel Linked – These loans can be take for up to 30 years and are usually linked to the rate of inflation. Adjustments to payment amounts are made on the outstanding loan depending on the inflation calculated by the Bank of Israel. Interest rates with this scheme may be lower than other options, but the amount may go up or down over time. This option is recommended for those who are purchasing properties for long term residential or investment purposes.

Real Fixed – The rate of interest remains fixed and no adjustments are made on the outstanding amount of the loan. This rate is usually higher than other schemes in order to compensate for potential fluctuations, but you know exactly how much you will be paying. This option is recommended for those how have a fixed income.

Prime Interest / Variable Israeli Interest – These rates can vary greatly depending on various economic and political factors. This option is recommended for short to mid-term real estate investors with a good understanding of financial markets.

Bridge Loan – This facility is used when purchase of a future property is dependent on the sale of an existing property. Once the existing property is sold, the loan can be repaid. This option is recommended for those who need to sell an existing property before than purchase a new one.

Most mortgage brokers today, recommend taking a combination of these loan options and dividing the mortgage amount amongst them.

Whatever be the type of mortgage loan you choose, make sure that you understand all the terms and conditions before making this decision.

The Guide to Closing on your Home in Jerusalem

At this stage you are towards the end of your thorough search for your ideal home in Jerusalem. It’s time to narrow it down to a few realistic candidates – and sometimes that’s not easy to do.

We hope the tips below help make the final decision and simplify the closure process:

Setting the cost – It is very important to establish the final price in shekels and take into account taxes, fees and other expenses. In cases where the price negotiations are done in dollars, make sure to consider fluctuation in the dollar– shekel exchange rate.

Verify the entrance date – When closing on a property it is crucial to establish the specific date on which the apartment can be occupied.

Define the Size – In Israel, apartments can be measured according to the usable floor space only (neto) or more commonly including the exterior walls and often public areas (bruto). Recently a law has been passed (chok hamecher) that requires all new construction to be presented in a uniform manner based on interior space only. Make sure you know the real size of the apartment in square meters and translate back into feet if necessary.

Know the exact amount of municipal tax (Arnona) – Arnona is a municipal tax which is based on the legal size of the property. For large properties, this amount can be significant and should be considered prior to purchase.

Maintenance Fee (Vad Bayit) – The maintenance fee for Jerusalem apartments varies from building to building. It normally ranges from 40-400 shekels every month notwithstanding luxury apartments. The fee generally covers cleaning public areas, gardening and maintenance. For some properties it also accounts for central heating (hasaka) during the winter months. For luxury residences, the fee may be significantly higher to cover the cost of doormen, gym, pool, etc.
Once you’ve covered the points above, you should be able to narrow down your list to a few candidates and make an offer.
Good luck and best wishes for a pleasant buying experience.

The Guide to Narrowing Down Home Selection in Jerusalem

At this stage you are in the middle of your search for your ideal home in Jerusalem and are now narrowing it down to realistic candidates.

We hope the tips below help make the final decision and simplify the process:

Feel comfortable with your location – You must feel super comfortable in your new home. Walk around the neighborhood at different hours of the day. Find out if you feel safe moving around at night. Look to see if conveniences, taxis and busses are close by.

Daytime and nighttime living - It’s always wise to check out an apartment both during the day and night so that you can get a clearer picture of living there In general, Jerusalem has lots of sunlight and is fairly safe at most hours of the day or night, but it is always a good idea to check it out for yourself.

Verify the number of rooms - Be wary whenever you hear about the 3.5 rooms. Verify the definition of the half room and find out if it makes a difference in expanding or renovating the property.

Consider the floor and elevator access – Apartments on higher floors may be discounted, but can also be challenging for young families and seniors. You should consider whether the floor is an issue and whether elevator can be added to the building.

Solar water heater – The presence of a solar water heater – known in Hebrew as a “Dude Shemesh” -can really save money over alternate heating methods. This should be considered during the purchase as a way of reducing electricity bills going forwards.

Balcony (mirpeset) – See if there is balcony and whether it is opened or closed. Find out if its possible to incorporate it into the apartment or gain direct access to a garden.

Parking – A car is not necessary for most parts of Jerusalem, if you have a car, however, parking can be an issue. Make sure you clarify the parking situation in the neighborhood which can range from free parking everywhere, to requiring residency and a sticker in order to legally park in the neighborhood.

These are just some of the many questions which you need to ask before renting or buying a home in Jerusalem. Feel free to add to this list and let us know what we might have left out.

The Guide for the Cost Effective Buying a Home in Jerusalem

There are several things which a foreigner has to bear in mind before buying Jerusalem real estate. This guide can help safeguard from paying excessively for a home in Israel. Some of these main points are discussed briefly below.

Heading off to Israel before your search – You should study the real estate market in the country thoroughly beforehand. Come and visit the cities you are considering and spend time in a few neighborhoods. After you get a feel for local scene you can start the actual search process. This will prepare you for actually viewing the properties and making offers.

Break down the asking price – An important tool in evaluating the relative value of a property is to break down the asking price into the exact amount per square meter. If you visit properties located in multiple neighborhoods, you’ll find that the going rate for each square meter can vary widely.

Avoid problematic sellers – Home owners in Israel think that there are two distinct prices – one for foreigners one for locals. It is recommended to use an agent to avoid price gouging and discover hidden problems with the property’s status, infrastructure or neighborhood.

Consider suitable properties – Prior to your trip, it is recommended to contact an agent who can show you some suitable properties while taking into account personal and financial considerations. If you are serious about a particular property get the services of a professional property engineer who can also issue a report regarding the physical condition of the property.

We hope that considering these points, we will enable a more cost effective process when purchasing your home in Jerusalem.

The Guide to the Purchasing Cycle in Jerusalem Real Estate

For those of you who are trying to buy a home in Jerusalem, this guide lays out the stages for purchasing a property in Israel and should be understood prior to commencing the search process.

We hope this will help you go into your purchase with your eyes wide open. Here are the basic stages:

The location – Focus on being close to most of your contemporaries. Various peer groups have a tendency to cluster together in specific areas. Many services in these areas may cater to your requirements and your loved ones will possibly reside close by. Analyze local shopping, buses, schools, synagogues & parks to see to it that they are compatible with the life you want.

The property requirements – In order to save significant time, create a checklist of crucial features required by you and convey it to your real estate agent. Some important factors include number of steps, balcony, Shabbat elevator, noise in the local area, storage and parking among others. After zeroing in on the size, location and type of Jerusalem luxury real estate, talk to your agent about costs, mortgages and price.

Fact-finding – After finding your ideal home, your next step involves questioning your agent on the legal status of the house. Expert agents are able to single out and explain if there are occasional problems. Your lawyer needs to find out if the owner is in fact the registered owner and storerooms, parking spaces, roof and garden are registered legally to the chosen property. In addition your laywer will check if the land belongs to the Minhal, a church, Amidar or tabu and their ramifications.

Negotiations – This can be simple or complex based on the issues involved with a particular property. It may also depend on the personalities involved in the transaction process. A professional agent will facilitate the transaction and leave both parties satisfied with the deal terms. This can include overcoming certain problems, putting forth productive alternatives or acting as a mediator.

The contract- The time taken finalizing a contract varies from days to weeks. You must have a lawyer who can confirm the legality of the transaction as well as protecting your interests.

The final – After signing the contract you should be geared to render the first payment against the price of the property, your agent’s commission and your lawyer’s fee. Also, all applicable purchase tax needs to be paid 50 days following the signing. Just co-ordinate with your lawyer regarding this payment and next thing you know you are living in your very own home in Jerusalem.

We hope this guides you to an efficient and effective purchase of your new home in Jerusalem.
Happy Buying!

The Guide for Prospective First Time Home Buyers in Jerusalem

Congratulations! You are considering purchasing a home or property in Jerusalem. Real estate in the Jerusalem has proven a wise investment over time and shows no signs of slowing down in the future.

In order to make the best choice for this important decision, you should consider the following advice as part of your purchasing process:

Understand the terminology – Take some time out of your schedule to learn the real estate terminology used in Jerusalem. These terms are in Hebrew and learning the basics can help you gain a better understanding of the proceedings.

Partner with a trusted agent – Advice from a trusted person who is intimately familiar with the local market, can help you make the decision which is right for you. From a pragmatic perspective, they can also be a one-stop-shop for understanding local regulations and providing references for trusted local professionals.

Get a lawyer - The legal considerations for real estate in Jerusalem and the rest of Israel can get complicated. In order to be completely sure that legal ownership has passed hands, you need a lawyer who can look into its history and dig up old ownership deeds when necessary. A competent lawyer stays by your side, from the negotiation stage to the final transfer of the deed.

Open a bank account – You may need to open an account at a bank in Jerusalem at least three months prior to purchase. A minimal amount must be remain in the account for at least three months before you can apply for a mortgage.

Consider a mortgage – The banks in Jerusalem have friendly mortgage policies. The process consists of getting a pre-approval report based on a combination of your personal finances, the size of the loan and the appraised value of the property. Its important to understand that most banks finance up to 70% of the value of the property, the remaining 30% is provided by the borrower in cash.

As in most countries, real estate transaction costs should also take into account professional fees, taxes and renovations where required.

With these guidelines in mind, you are now ready for your next step in buying a home in Jerusalem.

Trends for Luxury Real Estate in Israel

The Jerusalem real estate market has emerged as a hot commodity for many investors from across the globe. Home prices in the region have accelerated by an amazing 82.6% since May 2007. Outside of economic factors this is also due to personal, religious and political considerations.

All over Israel, many foreign apartment owners do not rent out their properties. This has led to the development of what is referred to as “ghost neighborhoods,” which are empty for a greater part of the year. This is compounded in Jerusalem by the many foreign buyers who purchase high-end properties and only use them 2-3 times a year for the Jewish holidays.

In order to stabilize the real estate market and avoid “ghost” ownership, the Finance Ministry and the Bank of Israel have brought changes in buying and mortgage policies, which may impact the outlook for investors.

Here are some recent trends which can help both the professional investor and home buyer better assess the Israeli real estate market:

Demand for luxury apartments remains – Wealthy buyers from other countries continue to invest heavily in symbolic and iconic places like the coast in Tel Aviv or close to the walls of Jerusalem’s Old City.

Price affected by Construction Index – A major part of housing contracts are attached to the Index of Residential Construction of the Central Bureau of Statistics. Foreign residents who convert currencies for investment can find the index affecting their anticipated investment expenses.

Vacation apartments may be the best deal – Jerusalem real estate also features properties which have been transformed into specialized “vacation apartments”. These properties are usually centrally located close to tourist attractions and holy sites. This allows owners to intermittently make personal use of their property as well as having ongoing income and a high return on investment.

Along with these trends, stability is still a concern for real estate markets. As elsewhere in the globe, there are many variables which are beyond control of the local market. At this point of time, however, the real estate sector in Israel looks bright for the near and mid-term.

Why is there Low Supply the Israeli Housing Market?

Israel has become one of the most sought after places in the world for real estate investment. As the locals like to put it: “Every inch of land here is worth its value in gold.” However, one aspect that challenges the housing market here is continuously increasing demand for a limited supply of properties.

Housing supply limited in Israel

The main problem in Israel is the distribution of land suitable for purchase and construction of homes. A large portion of the land here is inaccessible for prospective investors and developers. As a result, the housing market is concentrated in a limited number of areas, primarily in the middle of the country. The lack of room for expansion is one of the challenges in meeting the ever-increasing demand for new homes.

The demand for housing is high in Israel

Despite the restrictions in supply, the demand for housing continues, fueled by the growth of the Israeli economy, natural population growth, immigration and foreign investment. Increasingly, Israel has become a major commercial hub in the world and remained largely unaffected by the global economic crisis.

Furthermore, the government here encourages and supports real estate investors by providing favorable terms and economic stability. The low interest rates on mortgages also encourage increased demand in the market.

The special conditions of supply and demand in Israel have thus far prevented a housing bubble. In terms of recent statistics, it looks like that trend will also hold true in the near term.

No Israeli Housing Bubble?

Israel has a very active and dynamic housing market. According to government statistics, property values have increased over 80% since 2007. Interestingly, housing prices remained stable in Israel while they were bottoming out in America and Europe.

Israel is one of the most robust real estate markets in the world

The Israeli economy has experience steady growth with the shekel remaining a strong currency. This in turn has rationalized local supply and demand thus avoiding the bubble which occurred in many other countries. In Israel is the amount of available land which can be developed for real estate is limited. As a result, the majority of the population is concentrated in the more prosperous center of the country. In addition, a large portion of land here is state owned and significant bureaucracy must be overcome in order to get the proper real estate development permits. As a result of these factors, demand remains high while supply is limited. During the recent volatility of world real estate markets, this factor is what actually kept things in Israel more balanced.

Current opportunities in the Israeli property market

In 2013, approximately 42,000 new residential units were constructed in Israel, including the largest number of houses since 2000. This shows a return to growth which means opportunities for investors. Likewise, the banking system, taxation and government policies are working towards providing incentives for first time home buyers. This acts as another catalyst in bringing new buyers into the market on a constant basis.

Taking into account the control of local supply, renewed growth and favorable legislation, it looks like the real estate market in Israel will continue to be strong and stable for the foreseeable future.

What are my mortgage options in Israel?

Israel has become a major hub for real estate investments. One factor is the low interest rates offered by the local mortgage banks who offer a number of different options. It is believed that the low interest rates have contributed significantly to the stability of the Israeli housing market.

Mortgage options in Israel

Shekel Linked – These loans can be take for up to 30 years and are usually linked to the rate of inflation. Adjustments to payment amounts are made on the outstanding loan depending on the inflation calculated by the Bank of Israel. Interest rates with this scheme may be lower than other options, but the amount may go up or down over time.

Real Fixed – The rate of interest remains fixed and no adjustments are made on the outstanding amount of the loan. This rate is usually higher than other schemes in order to compensate for potential fluctuations, but you know exactly how much you will be paying.

Prime Interest / Variable Israeli Interest – These rates can vary greatly depending on various economic and political factors.

Foreign Currency – These loans are available for up to a period of 25 years, with interest linked to LIBOR and local economic indices.

Make sure you understand the terms and consequences of each option. Many times a combination of these options can be used for part of the mortgage amount.