Living in Paris, buying in Jerusalem: When foreign income meets an Israeli mortgage

For a growing number of Jews living outside Israel, buying an apartment here is no longer just a real estate investment. Sometimes it is a plan for the future, sometimes a home for the children, and sometimes simply the desire to know there is a place to call home in Israel. Yet it is precisely financially well-off buyers who discover that securing financing can be more complicated than expected. At Pama Mortgages, they say the key is not just the level of income, but the ability to properly understand financial lives that span two countries.

A family that has lived in Paris for twenty years visits Israel several times a year. The children speak Hebrew, some of the family is already here, and at some point an idea begins to take shape: Perhaps we should have a home in Israel. Not necessarily making aliyah tomorrow morning. Maybe not even in two years. But an apartment in Israel shifts from something "we might do someday" to a real possibility.

Among Jews in the Diaspora, there is even an unofficial term for this phenomenon: A "security apartment" - an apartment in Israel that serves both as an asset and as a kind of anchor for the future. The Jerusalem Post reported this year on growing interest in this concept among Jews living abroad, driven by the desire for security, a sense of belonging, and a real option to come to Israel when needed.

Then come the numbers. And here, somewhat surprisingly, even those who earn a good living may discover that their financing application is anything but straightforward.

An Israeli salaried employee typically arrives with documents the system knows well: Payslips, bank statements, existing financial obligations, and property details. For a non-resident, the picture can look entirely different. Income is earned in euros or dollars. The business is registered in another country. Tax returns follow a different structure. Additional assets are held outside Israel. Some of the capital is tied up in a company, some in an investment portfolio, and there may be liabilities denominated in another currency.

The problem is not necessarily a lack of financial means. Sometimes, quite the opposite. The financial capacity is there, but you need to know how to assess it.

This is one of the areas in which Pama Mortgages seeks to distinguish itself. Pama comes from the financing sector, with more than three decades of experience within the group, and today positions its mortgage operations as a solution for clients with complex financing needs. When reviewing a loan application, it examines, among other factors, net income, financial obligations that will remain after the financing is obtained, the property's value, and the amount of collateral.

In other words, rather than simply asking, "How much comes in each month?", it is necessary to understand where the money comes from, how stable it is, and how much remains after all other financial obligations are taken into account.

There is a significant difference between a salaried employee who receives a paycheck in dollars and a business owner in London. There is a difference between someone planning to move to Israel within a year and a family looking to hold a property here for the next decade. And there is a difference between a client seeking maximum financing and one who has substantial equity but does not want to transfer all of it to Israel.

This is where another limitation comes into play. Within the banking system, financing for the purchase of an investment property is generally limited to a loan-to-value ratio of up to 50%. For the purposes of this restriction, the Bank of Israel also places an apartment purchased by a non-resident in this category.

For an apartment costing NIS 3 million, the difference between 50% financing and a different financing structure is no longer a technical detail. It represents a substantial amount of money that the buyer must provide from their own resources.

Someone who owns a business in Paris may prefer to keep their capital in the business. A family in New York may not want to liquidate an investment portfolio. And a buyer from London may be perfectly capable of putting up NIS 1.5 million and still decide that doing so is not the right choice. It is entirely possible to have substantial financial means and still prefer liquidity. The two are not mutually exclusive.

Pama Mortgages currently offers the possibility of total financing of up to 80% for qualifying transactions, alongside solutions for property purchases, bridge financing, investors, and complex transactions. It is important to emphasize that this is not a promise of 80% financing in every case, and the final terms depend on underwriting and the individual circumstances of the client and the transaction.

And this is precisely where the figure of 80% matters less than the question that comes before it: How can financing be structured so that buyers do not have to dismantle their financial lives in one country just to purchase a home in another?

From Pama's perspective, such a transaction should not be evaluated as though a non-resident were simply "an Israeli with a different address."

The perspective needs to be broader: The property in Israel, sources of income abroad, existing financial obligations, the liquidity the client wishes to retain, and the most important question of all: What will their repayment capacity look like once the excitement of buying the apartment has worn off?

This may be the least romantic part of the story. And it is probably also the most important.

Because someone buying an apartment in Israel from abroad often has many emotional reasons for making the purchase. Family. Belonging. Investment. The children. Thoughts of making aliyah. Perhaps even the feeling that the next time they come to Israel, they will no longer be staying at a hotel.

Precisely for these reasons, the financing needs to remain a practical, financially sound decision.

Ultimately, the challenge is not just financing an apartment in Israel. It is knowing how to properly understand the person who lives outside it. And that is exactly the territory Pama knows inside out.

This article was written in cooperation with Pama