Purchasing an apartment in Israel seems like an uphill battle - esp. when you need to take a mortgage. However, many many families have overcome this hurdle and have the property to prove it.
Sometimes purchasing takes some creative thinking and financing. The subject of mortgages and apartment purchases has been discussed on our tachlis list (discussion list about the practical aspects of aliyah). Below are the slightly-edited back- and-forth discussions among people that went through the process, and these may be of help to a wider public.
To start with, olim have the right to take a government- subsidized mortgage. Because this mortgage covers merely a fraction of the cost of a house, the question is how to finance the rest. On top of that, property sellers and banks in Israel generally demand a larger down-payment than in other countries.
If need be, take a look at the other documents we have available on purchasing an apartment: Organizing Your Mortgage, and Government Mortgages to New Immgrants. But see below for some real, down-to-earth solutions:
Q: Friends of mine heard a horror story about taking a mortgage in Israel. They did not go into the story, but wanted to know if most people take a government loan when buying an apartment or get private loans from family and friends (or both).
All of the above. Almost everyone who declares themselves an oleh takes the government loan because part of it turns in to a grant so it's free money.
Q: In reference to the government-subsidized mortgage: Can this be used in addition to the 75% mortgages that seem to be available now? In other words, can the subsidized mortgage be part of the 25% downpayment?
Did I blink... Where does one get a 75% mortage in this country??
Try Bank Tefachot. They give 75% of the value of the residence, with two guarantors. If your monthly payment is less or equal to a third of your net income (both spouses) you can get 80%.
This has nothing to do with your immigrant status. These rules are for Israelis or New Immigrants.
Q: Shalom: If you could take some time out to help us, we would really appreciate it because we are getting mightily discouraged. I went to Tefachot and saw Larry Meinstein. They want a minimum of 50% down, but will consider 40%, which is still out of our range. We can probably get guarantors, and can easily afford a monthly payment on a $175,000 mortgage. If we put $50,000 down, that means we can afford to buy a house worth 225,000. But on a 225,000 dwelling, they want 40%, or $90,000 which we don't have. Also, it's very hard, if not impossible, to find a 4 or 5 room apartment in town for less than 200,000, which appears to be all they'll let us have. Any ideas?
ANSWER #1: With respect to mortgage banks -- keep shopping around, and try to convince them what great financial potential you have ("I'm new, so i'm just making x, but my husband/wife and I are both educated, soon be making more, etc.").
In our case, we found differences even with respect to the government oleh mortgage, which is supposed to be governed by regulation! Tefahot wanted 3 guarantors (2 working); Adanim ( a smaller and in my experience more flexible bank, also owned by Mizrahi) settled for 2 guarantors (1 working). Also, try Bank Yerushalayim-- they, too, have a reputation as a more flexible bank.
Don't give up easily: negotiation and persistance (nicely) helps.
ANSWER #2: Other options:
- To check the places where each of you work. It may be / should be possible to get NIS 10,000 or so loans from places of work (Jewish Agency gives up to NIS 20,000 for a first home loan).
- There are about 20-30 Gmachs (free loan societies) around Jerusalem (and more in other parts of the country). Most give MINIMUM NIS 1,000. Problem with this is that most want the money back w/in a year's time, and request guarantors.
- AACI has a loan society that comes from the city(s) of Aliyah. You have to pay it back w/in 2-3 years. The amount of the loan depends on the city - for example, interestingly enough, Miami has a larger loan than NYC.
- Did either of you go to YU / Stern? YU-Israel alumni also has a loan society. Contact me off-list for details. Maybe your alumni, back home (or here?) has a loan society as well.
- A friend of mine who didn't have enough money to buy, sought out & found some private investors. They paid for his home (home it is, in Efrat) and he made agreements with them about paying back.
- Relatives, but be careful with this as it's like walking on glass when you pay them back.......
- DO NOT EVEN LOOK AT THE ADS IN THE PAPERS FOR LOANS - THESE ARE THE LOAN SHARKS WHO WILL RUN YOU DRYER THAN A DRY MARTINI!!!!
Q: It's been a couple of years since the Ministry of Absorption/Housing adjusted the mortgage it gives to new olim. I heard recently that they are planning this soon. Has anyone heard likewise?
There have been rumors like that since we came here (there hasn't been an adjustment since at least 1991) and we also put off taking ours as long as possible because we hoped there would be an adjustment. My guess is that those rumors are a lot of wishful thinking....
Q: On Jun 1, which is when I get paid, and when my mortgage is deducted automatically from my account (horaat keva), my boss and I were running around to customers, he said he'd pay me next week, and that he was sure the bank would just charge me interest, which he would pay me. I said OK, but after Shavuot I discovered that the bank had bounced the payment. My boss called yesterday and hollered at the bank manager (he does that better than I do) who said that's the way we do it here (Leumi), I was over my credit limit and the bank doesn't have time to make phone calls. My boss said that his accounts at Mizrachi and Poalim would never bounce a payment of his without talking to him first. The only other banks in the neighborhood are Poalim and Discount, I'm not going to use a bank I can't walk to. Should I stick with the lousy service I get from Leumi, or should I switch to the lousy service available elsewhere? Or is the Leumi manager acting improperly?
ANSWER #1: Hey - you must be new to Israel! You'll get lousy service at all the banks. I'll trade you the lousy service at my Poalim for your lousy service at Leumi, and then we'll switch back next year.
ANSWER #2: Do you have overdraft protection? Any chance you an increase it? Basically what overdraft is - it's a line of credit that allows your checking account to go into minus and your checks will still be paid.higher interest rate. I would suggest going into the bank and trying (to the extent they will tell you such things :-) to get a straight answer from them about just what the rules are. Generally you should be able to get an overdraft equal to at least one month's (net) salary.
ANSWER #3: My Leumi manager (Kikar Herut) would NEVER do that, and as a matter of fact there have been several times when we WERE called on exactly those types of things ......
I also think that it's NOT the manager who bounces your stuff, but a 'lesser pakid'. Find out who that lesser pakid is, and instead of yelling, try softening him/her up (1) new account, (2) I got $$$ in the States & what's your professional opinion on where should the $$ go, (3) sometimes payments are late & could you please not bounce my checks.........
Make sure you use the word, "professional".
ANSWER #4: To all you newcomers, also note that (as we found out the hard way) if you bounce a certain number of checks or payments in a certain period of time, the bank will CLOSE YOUR ACCOUNT, and you will be prohibited by law from opening up a new one for a period of 7 years.
We would like to thank the following tachlis participants for their input here: Warren Burstein, Carl Sherer, Gary Heller, Steven Edell, Ira and Natanya Slomowitz, Ralph Birnbaum and Dovid Siberberg.