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MORTGAGE TIPS For New Immigrants

MORTGAGE TIPS for New Immigrants:

People who immigrate to Israel are entitled to receive a basket of absorption benefits.  Government offices and authorities are aware of the anticipated predicaments and offer both social and financial assistance.  The mortgage track offered to new immigrants provides a low interest rate, easy repayment schedule etc.  Compared to the regular mortgage tracks offered by the banks, there is no doubt that this mortgage track is exceptional.  Apartment prices in Israel are very high, with no mortgage benefits for new immigrants.  There are very few new immigrants who can afford to buy an apartment straight out.

How do you become eligible for this assistance?

Every new immigrant is entitled to receive a New Immigrant Identity Card from the Ministry of Aliyah and Immigrant Absorption.  This card will open the doors to other benefits. 

Mortgage assistance for new immigrants starts with a visit to the Ministry of Construction and Housing so that a Certificate of Eligibility may be issued.  This certificate may only be issued on presentation of proof of identification, marriage certificate and confirmation of service in the IDF (if applicable).  This certificate is valid for one year and includes the names of all the family members expected to be living in the relevant apartment.

Mortgage track for New Immigrants

The mortgage banks are well aware of the assistance that new immigrants receive and, therefore, offer attractive plans.  The basic terms offer a fixed rate of 3%, with repayments in instalments over 25 years, early repayment without incurring a fine or commission.  There are also banks which offer even more attractive plans. The mortgage market in Israel is very competitive.  We would point out that the extent of a mortgage will be no higher than 95% of the apartment price, while the sum given will be determined in accordance with eligibility points.

How are eligibility points calculated?

The length of time that someone has been living in Israel is a very significant parameter for determining eligibility points:  during the first year of Aliyah in Israel families will automatically receive assistance at the rate of 1,700 points, families who have been living in Israel for more than one year will automatically receive 1,800 points.  Individual new immigrants from the age of 21 are eligible for 600 points.  Single parent families, large families, and immigrants who are 45 years and older, are automatically eligible for additional points.  New Immigrants who have served in the IDF or in the reserves are also eligible for additional points.

There are additional benefits if the prospective property is in a development area, high security area or in the periphery.  The mortgage tracks for new immigrants boost development all over Israel and the authorities encourage new immigrants to settle in towns far from the center of the country, while assisting them to find suitable work.

The advantages of the mortgage track for New Immigrants

Recognition of the fact that new immigrants have to cope with many difficulties accords them a lot of support.  Without just such a track many new immigrants would not be able to purchase an apartment or establish themselves financially in Israel.  Remember, other than moving to a new country, the new immigrant has to undergo a period of absorption and learn a new language as well as different habits.    It is not necessary to purchase property immediately upon arrival in Israel since eligibility to a mortgage track is spread over approximately 15 years.  New immigrants can take advantage of this eligibility at any time during those 15 years but, in order not to lose this benefit due to the time limit expiring, they should acquaint themselves thoroughly with their rights in Israel.

You should note that, over and above the sum allocated to new immigrants by the State for purchasing an apartment, it is still necessary to apply for a bank loan.  However, the banks are obligated to check whether you are capable of repaying the loan, i.e. do you have a current job and the size of your income.  In addition, to do the rounds of the various banks you would need to be accompanied by an experienced, private mortgage consultant who has only your interest at heart.

Written by Zahi Grossman –Expert financial and Mortgage consulting.