Israeli banks will lend investors up to 50% of the value on residential properties.
It is also possible to use an existing property in Israel as collateral to obtain financing for an additional property. This can be done as long as the combined liabilities on both properties are below 50% of the total combined value.
Blue Crown Capital advises investors how to maximize financing options and to structure the loans.
We have assisted many clients in purchasing a second property by using their principal properties as collateral without putting any down payment. This has been possible due to the increase in property values in Israel over the past few years.
How is this done?
A client bought an apartment 4 years ago for two million shekels and took a 70% mortgage.
Today, that same property is worth 3 million shekels and the mortgage is down to 1.25 Million NIS.
The same client now wants to purchase an investment property for one million shekels.
The combined value of the two properties will now be 4 million shekels and a mortgage bank would be able to lend up to 50% of this value i.e 2 million NIS. Therefore one could take 500K NIS and a further 250K NIS on the property being purchased thus only having to put down a 250K NIS deposit.
As long as the client has the income to qualify for the mortgage, the mortgage will be approved. Moreover, the future income from the investment property will count as income for the pre approval.