Additional loan – Mortgage loan given by the bank in addition to the loan from the Ministry of Housing. The two mortgages combined can reach the maximum percentage of funding provided by law and not beyond.
Agreed compensation – According to Contracts Law, the purchase agreement contains an agreed compensation clause (usually 10% -15%). This amount will be paid to the injured party without proof of damage in case of breach of contract and non-compliance with essential clauses within a reasonable time determined in advance.
Appraisal – Will determine the value of the property. The appraiser takes into account many factors such as asset status, location and market conditions.
Approval in principle – Also known as pre-approval. It is intended to approve the loan application of the borrower by the bank for a limited period of time that is usually 3 months, which checks his financial situation, the purpose of the loan and the quality of the asset. This approval does not bind the bank or the borrower. In order to obtain it, you will need to present an identity card, the current account statements for the last three months, three last payslips, the value of the property, the location of the property and the requested percentage of financing.
Approval of Rights – Approval received from the Israel Land Administration / Housing Corporation, detailing the rights registered regarding the property, the asset identification details, mortgages and seizures, if any.
Block / Parcel / Sub-Parcel – After separation, each property receives an “identity card” which enables it to be identified as a single-value.
Bullit Loan – One of the mortgage repayment methods. Especially effective as a “bridging loan”. Under this method, only interest is paid once a month, and at the end of the period the principal amount is paid at once. This loan is usually given for short periods (up to two years) and you have to give a proof of where the funds will come from (for example, the existence of another property that will soon be sold).
Capital gains tax – When the property is upgraded, for example: As a result of a city building plan or the use of a permit that deviates from the original designation of the property, etc. As specified in the law, the local committee will collect a tax from landowners or leaseholds for future generations.
Capitalization – Calculates the future value of money.
Consumer price index – It measures changes in the price level of consumer goods and services purchased by households.
Deflation -In economics, it is a general and prolonged decrease in the price level of goods and services. The opposite of inflation.
Dissolution of partnership – A person who has signed a cooperation / partnership agreement may at any time request the dissolution of the partnership, even if it is concluded in the agreement that it can not be canceled. This usually happens in case of divorce or debts that one of the partners has encountered.
Dragging a Mortgage – If you want to sell your existing property and buy a new property and the conditions of the existing mortgage are excellent, you do not want to give them up – you can drag the existing mortgage AS IS to your new property (with the approval of the bank). If you sell your existing apartment and you still haven’t found another apartment to take over the mortgage and want to keep the same conditions, you can drag the mortgage through a bank guarantee until you find an other apartment.
Early repayment of the mortgage – Full or partial repayment of the mortgage debt before the fixed date. During partial repayment, the amount of the monthly payment decreases or the repayment period.
In some cases, during an advance payment, there is a fine for early repayment and therefore, consider whether it is worthwhile.
Eligibility – Loan granted by the Ministry of Housing and Construction according to predefined criteria such as age, economic status and military service, for first-time home buyers.
Equal Fund (keren shave) – In an equal fund table, a fixed portion of the principal is paid back on a monthly basis to the account (the loan amount is taken and divided by the number of months left to be repaid) to which the interest is added. Since the fund decreases each month, if you do not consider changes in the index or interest, the interest payment decreases every month due to the decline in the fund. The advantage of this table is that at the end of the loan, the amount paid to the bank is lower than the ‘’spitzer fund’. In addition, if the loan is a fixed rate loan, the monthly repayments decreases.
Financing rate -The ratio of the amount of the mortgage given by the pledge of the asset to the value of the asset.
Fragmentation : The division of land into identifiable plots/parcels that can be registered in the Land Registry.
Grace / partial grace – Postponement of payments. For example, if an apartment is purchased from a contractor and it will only be ready in another two years, the buyer, in the meantime, will continue to pay the rent. Therefore, in order to avoid double expenses (both mortgage and rent), it is possible to obtain the postponement of the total payment (full grace) or to pay only the interest without the principal payment (partial grace).
Bank approval must be obtained in advance.
Housing company – A company that manages registration of real estate until the registration of the property is transferred to the Land Registry office .
Income-producing property (nehes maniv) – An asset that generates income.
Inflation – In economy, it is a sustained increase in prices over a period of time – The opposite of the inflation is deflation.
Inter Ministerial Committee – In cases where the mortgage loan is eligible (at least part of it) by the Ministry of Housing and Construction and if the borrower has difficulties repaying the mortgage, it is possible to contact this committee that will examine the possibility of facilitating the mortgage repayment of the borrower.
A representative of the Bank, the Accountant General and a representative of the Ministry of Housing and Construction are present on this committee.
Israel Land Authority– Body that manages the state land. 93% of the land in Israel is under its administration, in the public domain. It is either property of the state, the Jewish National Fund or the Development Authority.
Land Registry Office (Tabu) – Land Registration and Settlement of rights. This body registers real estate assets in the land registry and gives it legal validity.
Lease – An agreement in which the property owner gives rights to a second party. In Israel, this lease is a long-term lease of more than five years.
Lease for generations – Lease for a period of 25 years or more.
Legal guarantee on the sale – This guarantee is intended to protect the buyer in case money has been paid to a contractor and the construction of the new housing is not completed. Therefore, a law states that if the buyer transfers to the contractor an amount higher than 7% of the price, the contractor must provide a guarantee that will protect the buyer’s money.
Letter of Intent – Document issued by the bank confirming that once the entire balance of the mortgage has been paid, it will agree to cancel the pledge, mortgage. For example, if you sell your apartment and you still have a mortgage on it, buyers will not be able to take out their own mortgage without a letter of intent from your bank.
Life Insurance – Protects borrowers and the bank in case of death of one of the borrowers. Thus, the insurance company will repay the balance of the loan that has not yet been repaid by the bank. The Bank requires borrowers to take a life insurance.
Limited Account – An account will become restricted if, within a year, at least 10 checks have not been paid. The restriction period is one year. A severe restriction exists when two or more bank accounts have been restricted or if the account has been restricted again within three years from the date of the previous restriction lifting.
Mortgage – Lien/pledge on real estate as guarantee for repayment of a loan.
Mortgage of property – The property is mortgaged at the bank to obtain the loan. If you do not meet the mortgage payments, the bank can take the property and get its money back.
Mortgage security transfer – According to the Sale Law – when buying an apartment from a contractor, guarantees on the funds are received. If you take out a mortgage for the purchase, the money you need to protect is the bank’s money and therefore the guarantee that the buyer has received is for the bank.
Nominal interest – Interest before expected changes such as indexation or exchange rate.
Preliminary sales agreements – This agreement summarizes the negotiations on the transaction being agreed between the two parties, with the purpose of declaring the intention to sign a sales contract. It is important to note that this agreement is a legal contract that binds its signatories.
Property Insurance – Protects borrowers and the bank in case of property damage (for example, earthquake / fire). The Bank requires borrowers to insure their property.
Purchase tax – Tax payable when purchasing an asset (a certain percentage of the property price).
Purchasing group – A group of buyers obligated to a contractual framework, which is organized for the purchase of a right to land and construction on the land, through an organizing party from which it receives payment.
Redemption ratio – The ratio between the monthly mortgage repayment and the monthly income. From the monthly income must be deducted the payment of loans / expenses of alimony and fixed expenses and add the income from alimony / rental, etc.,
Refinance a mortgage – Repayment of the existing mortgage and underwriting a new mortgage mainly to improve the terms or adapt it to current needs.
Repayment plan – It determines the mortgage repayment steps. At the end of the loan period, both the amount borrowed (principal) and interest will be fully repaid.
Saturated construction – Shared buildings with two or more floors, including at least four residential units in the entire building and at least one unit on each floor.
Self-construction – Purchase of land and construction of the house independently. In this case, plans and building permits must also be submitted to the Bank. When it comes to self-construction, it is not possible to release all the money from the mortgage at once, but in stages depending on construction progress. An appraiser comes for examination. After reviewing the plans, he assesses the value of the asset at each step and releases the funds accordingly in accordance with the approved funding percentages.
Spitzer fund– In the monthly Spitzer table, monthly payments are equal (if you do not take into account the evolution of the index and the interest rate). At the beginning of the loan, the principal component is small and the interest rate is high and this is reversed until the end of the repayment. The advantage of this table is that the monthly repayments are small compared to the equal fund table (keren shave).
The land registry deed (tabu): Approval received from the Israel Land Administration / Housing Corporation. The land registry deed includes a description of the real estate, the landowners and their rights. It also mentions liens and actions registered, if any.
Unification of Rights – This is the case of the purchase of a shared apartment for a number of new immigrants with family ties (limited to 3), each with an new immigrant (ole) certificate. This eligibility increases the amount that people can receive together.
Warning note – Registration in the land register regarding the written commitment of the landlord to make real estate transaction.
Two reasons to register a warning note:
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- Warn and notify the party interested in the real estate / land for which the warning note is registered that there is an undertaking on the part of the landowner to make a transaction on it or not.
- Prevent the landlord from making two conflicting transactions.
Contact us now for mortgage advice and more details about your options
Itay Mardix – Financial and Mortgage Advisor.
Phone number – 052-6007476
Office – 074-7419441
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