COVID19 (Well, at least the first wave…) has had quite the impact in the traditionally cautious Israeli banks. With the easing of Bank of Israel lending requirements, as part of the central strategy of COVID recovery plan, and historically low interest rates, some of the Israeli banks are now able and willing to offer certain finance solutions that until not long ago seemed virtually impossible.
Here are some of the most significant changes we’ve seen recently:
Purchase tax is reduced, and can now be financed. Commercial mortgages allow for interest only payments , “Cash out” refinances have become a viable liquidity solution , and market interest rates are at historic lows!!!
- Purchase Tax – To be reduced from 8% to 5% for purchasers who are neither Israeli residents, or residents who already own a residential property in Israel. This dramatic step cuts the total closing costs for an investor by ~40%!
Plus, now you can finance it too!
- Cash-Out Refinances – Used to be up to 50% loan-to-value. Currently, until Sep 2020, can go as high as 70%., regardless of citizenship or residency
- Commercial loans – When either the property is commercial, or the owner of record is an entity, some banks will now offer a 5-7 year interest only term, on a 20-25 year amortisation schedule, with no prepayment penalty.
- Interest Rates – Rates are now at historic lows: Adjustable US Dollar linked loans @ ~2.1%-2.5%, or effective rates in Shekels @ ~2.65%-3% on a 15-30 year terms .
*Most of the programs are temporary in their nature, some set to expire in 9/2020.
*Each program has specific terms and conditions that must be met for eligibility.