Borrowing Against an Israeli Apartment You Already Own

A widow in Lyon owns a two-bedroom flat in Netanya that has been in the family, mortgage-free, since the 1990s. Her daughter in Paris is buying a first home and needs help with the deposit. The obvious move is to borrow against the Israeli flat, which is worth a great deal more than the sum the daughter needs, and leave it in the family rather than sell. She asks an Israeli bank for the equivalent of seventy percent of the apartment's value and is told, politely, that the answer is half. Not because of her age, her nationality, or her file, but because the ceiling is set by the regulator and the branch cannot move it.

This is the reality of borrowing against an Israeli property you already own when you live abroad. The banks do lend. What they will not lend is the amount most owners have in mind, and understanding why saves a great deal of wasted time.

Two Kinds of Housing Loan

Israeli banking regulation draws a line that surprises people who are used to a French or Anglo-American remortgage. A housing loan taken to acquire a right in a property is one thing. A housing loan taken for any other purpose, but secured on a residence, is a different thing: an all-purpose loan, in Hebrew a mashkanta lekol matara.

The distinction matters because the loan-to-value limit is different, and it is not negotiable at branch level. Proper Conduct of Banking Business Directive 329, issued by the Supervisor of Banks at the Bank of Israel, sets those limits. For an all-purpose loan backed by a residence, the ratio may not exceed 50 percent of the value of the dwelling. So the widow in Lyon can borrow up to half the value of her Netanya flat, and the purpose of the money, helping her daughter in Paris, is exactly what makes it an all-purpose loan rather than a purchase mortgage.

The same directive already caps a foreign resident buying a property at 50 percent, and defines a foreign resident, for the single-apartment and replacement-apartment categories, as anyone who is not an Israeli citizen. A non-resident owner therefore sits at the same 50 percent ceiling whichever way she comes at it, and there is no version of the transaction that unlocks more.

There is a relief, but it was not built for her. The Supervisor has made permanent a rule allowing a bank to approve an all-purpose loan even where the loan-to-value ratio exceeds 70 percent, provided the portion of the loan above a 50 percent ratio does not exceed NIS 200,000, roughly EUR 50,000, and the maximum property value used in the directive's calculation is updated in line with the Consumer Price Index. That was designed for an Israeli household needing a modest top-up on a modest home. A bank's own credit policy for a borrower with a foreign address and foreign income will normally stop at 50 percent regardless.

In Practice: Proper Conduct of Banking Business Directive 329, issued by the Supervisor of Banks at the Bank of Israel, caps an all-purpose loan secured on a residence at 50% of the dwelling's value, the same ceiling that applies to a foreign resident buying. A permanent relief allows a ratio above 70% only where the portion above 50% does not exceed NIS 200,000. The bank's own appraisal governs the value, the charge is registered in the Land Registry, and a non-resident file from application to drawdown commonly takes two to four months, longer where the apartment is not registered in the borrower's name in the Tabu.

The Number the Bank Uses Is Not Your Number

The 50 percent is applied to a figure you do not choose. The bank instructs its own appraiser, the appraisal is at your cost, and the appraiser's valuation is deliberately conservative. It is common for that figure to land below the price a local estate agent would quote, and half of a cautious appraisal can be a long way below half of what the owner believes the flat is worth.

For a non-resident this compounds a second problem, which is proving income. An Israeli underwriter has to read your finances in a form the file can hold, and a French borrower's avis d'imposition, payslips, or an accountant's certificate generally have to be translated. A letter from your French bank vouching that you are a good customer does not do the job. The underwriter is testing whether you can service a shekel loan from euro income, and the exchange-rate risk of that arrangement is part of what he prices.

Doing It From France

The encouraging part is that a non-resident owner rarely needs to fly to Israel to complete an all-purpose loan. The mechanics travel.

In Practice: The loan documents and the charge can be executed under a power of attorney signed before a notary in France and apostilled for use in Israel. The Israeli notarial fee scale in the Notaries Regulations (Service Fees) 5738-1978 is NIS 197 for the first signatory and NIS 77 for each additional signatory where the equivalent step is done in Israel, and since 1 May 2025 French apostilles are issued by French notaries free of charge. The charge is then registered against the property at the Land Registry (Tabu) under the Land Law 5729-1969, a step that takes days where title is clean and can add several months where the flat sits in a housing company register or is unregistered.

Two further points follow from doing it remotely. The power of attorney has to be drafted to cover the specific bank, the specific facility, and the registration of the charge, because an Israeli bank will reject a general power that does not name what it authorises. And the source of the money you intend to use to repay will be reviewed, since a loan serviced from abroad raises the same anti-money-laundering questions as an incoming transfer. Expect to document where the euros come from before drawdown, not after.

If the underlying question is whether a non-resident can obtain any Israeli mortgage at all, the eligibility and pricing picture is set out in our guide to how non-residents get a mortgage in Israel, and the drafting of a French power of attorney for an Israeli transaction is covered in our note on the Israeli notary power of attorney for French residents.

Where a Non-Resident File Stalls

The file rarely fails on the credit decision. It fails on title, and it fails quietly, weeks in, when the bank's lawyer looks at the register.

Common Mistake: Assuming the apartment can be charged simply because you own it, and applying on the strength of the market price. If the flat is registered only with a housing company or a developer rather than in your name in the Tabu, no charge can be registered until the title is transferred into the Land Registry, and the bank will not draw down until it is. Combined with the appraisal coming in below market and the hard 50 percent ceiling under Directive 329, an owner who expected roughly EUR 200,000 against a flat she values highly can find the actual offer is half of a lower number, on rights that first have to be registered at a cost of several thousand shekels and several months before the bank moves at all.

Two situations make this worse for families abroad. The first is co-ownership. Where the flat is held jointly with siblings, or under a succession order, every registered owner must sign the charge, and one heir who declines can stop the whole transaction however small his share. The second is the inherited flat that was never registered after the previous owner died, which is common and which turns a loan application into a probate-and-registration exercise first.

Practical Checklist

• Confirm the flat is registered in your name in the Land Registry before you apply, and deal with any housing-company or unregistered title first.
• Treat 50 percent of the bank's appraisal, not of the market price, as the realistic maximum, and commission the appraisal early so the number is not a late surprise.
• Prepare translated French income documents, tax notices and payslips or an accountant's certificate, rather than a letter from your bank.
• Have a power of attorney drafted to name the specific bank, facility and charge, executed before a French notary and apostilled at no charge.
• If the flat is co-owned, secure every registered owner's agreement to the charge in writing before you incur costs.
• Resolve the source-of-funds evidence for repayment, and the home-country interest treatment, before signing rather than after.

Speak With an Israeli Attorney

We handle the Land Registry side of an all-purpose loan for owners abroad, deal with the appraisal and the registration of the charge, and clear the title problems that stop a non-resident file before the bank ever reaches a credit decision. For a French owner, getting the power of attorney and the income documentation right at the outset is what keeps the transaction inside the two-to-four-month range rather than open-ended.

Contact us for a confidential initial consultation.