In part 1 of this series we discussed when one should apply for a mortgage and the minimum criteria needed to qualify for a mortgage.
See: Before you apply (Part 1 of the Israel Mortgage Primer series).
In this installment, we delve into the documentation that lenders will require for the application process.
What documentation will I need to prepare for approval?
Lenders will minimally require the following documentation for the approval process:
- An application from the borrowers and co-signers (if any)
- Proof of income
- Copies of recent bank statements
- Photo ID’s
- Credit reports (where available)
The application will include;
General information regarding the borrowers and cosigners, including contact information, personal finances, employment, income, place of residence, citizenship, etc.
Information about the property (if known at the time of application) or at least the value of the property that the borrower is considering.
Details regarding the loan being requested, including amount, term (years), mortgage products (which will be discussed later in the series), currency (there are options for other currencies, in addition to NIS).
Proof of Income
Proof of income will vary based on the borrower’s specific situation.
For an Israeli resident, who is an employee and receives a monthly paystub (tlush), a copy of the three most recent paystubs is usually sufficient.
If the borrower/cosigner is either a self-employed Israeli OR a non-Israeli, irrespective of whether they are an employee or self-employed, they will be asked to provide the last two available tax returns as well as a letter from a certified accountant estimating the current year’s income.
Later installments will discuss various types of income that may or may not be accepted towards the approval process.
However, in general, any income that is verifiable and the banks would view as ongoing recurring income would likely be accepted as income in calculating the Debt-to-Income ratio (DTI).
Copies of Recent Bank Statements
Lenders will want to see copies of the last 3 primary bank statements of the borrowers/cosigners.
They will review these statements to see that stated income is coming into the account and that recurring debits coincide with information stated in the application.
This would include items like rent, mortgage payments or car payments.
For Israeli citizens, the lenders will want to see a copy of the Teudat zehut and sefach. If this is not available (because they live outside of Israel), they will want a copy of a valid Israeli passport and a valid driver’s license.
For non-Israeli citizens, copies of valid passports and driver’s licenses will be required.
For Israeli residents, lenders will run a credit check within Israel.
For non-residents, they will request a copy of a credit report where available.
This will apply to residents of North America and other countries where credit reports are readily available.
Next up in the series: What mortgage products are available and what are the pros and cons of each?
Prior post in the series: What do you need to know before you apply for a mortgage in Israel?
The author, Norman Shapiro, lives in Israel and is available for consultations during regular business hours in Israel as well as evenings to accomodate foreign clients. He may be reached at email@example.com or you are welcome to schedule an appointment at this link.