All Real Estate Terms — In One Place

A long-term loan provided by a bank for the purpose of purchasing a property, with the property itself serving as collateral. If the borrower fails to make payments, the bank is entitled to foreclose on the property.

Loan to Value — the ratio between the mortgage amount and the property's value. According to Bank of Israel guidelines, the maximum LTV is 75% for a first home, 70% for a home upgrade, and 50% for an additional investment property.

Payment to Income — the percentage of net monthly income that goes toward monthly mortgage repayments. The Bank of Israel caps PTI at 40% of net income.

The Bank of Israel's base interest rate plus 1.5%. It serves as the basis for variable mortgage tracks. When the Bank of Israel raises its rate, the prime rate rises accordingly and monthly repayments increase.

A fixed mortgage track whose interest rate is not linked to the Consumer Price Index. The monthly repayment is known in advance and does not change throughout the life of the loan. Considered the safest mortgage track.

A mortgage track in which the loan principal is linked to the Consumer Price Index (inflation). In inflationary periods, the outstanding debt grows even as payments are made. The interest rate is generally lower than the fixed unlinked (Kalatz) track.

The allocation of a mortgage amount across different tracks (prime, fixed unlinked, CPI-linked, etc.). A good mortgage mix balances risk, flexibility, and total cost. The Bank of Israel limits the prime-rate portion to 33% of the total loan amount.

Repaying an existing mortgage and taking out a new one on better terms. It is worthwhile when interest rates have fallen significantly since the original mortgage was taken. Always calculate the early repayment penalty before refinancing.

A penalty charged by the bank when a borrower repays the mortgage before the agreed date. The penalty amount depends on the interest rate differential and the remaining loan term. Some mortgage tracks are exempt from this penalty.

A professional who specialises in selecting a mortgage mix and negotiating with banks on the borrower's behalf. A good advisor can save tens of thousands of shekels over the life of the loan. Their fee is typically ₪3,000–₪8,000.

The Land Registration Office — the government body that maintains the register of real estate rights in Israel. Every real estate transaction must be registered with the Tabu to be enforceable against third parties.

An official printout from the Land Registration Office detailing all rights, mortgages, liens, and caveats registered against a property. Checking the Tabu extract is mandatory before any purchase.

A registration in the Tabu indicating that a contract has been signed regarding the property. The buyer registers a caveat after signing the contract to protect their rights and prevent the seller from selling to another party.

The legal document that transfers ownership of the property from the seller to the buyer. It is signed in the presence of a lawyer and submitted for registration in the Tabu. Without a signed and registered deed, the transaction is not complete.

A preliminary and informal agreement signed between buyer and seller before the formal contract. In Israel, a letter of intent may be considered legally binding — so it is important to consult a lawyer before signing one.

A lawyer with special authority to authenticate legal documents. Required for certain transactions such as powers of attorney, transactions involving non-residents, and documents intended for use abroad.

A legal restriction placed on a property due to a debt owed by the owner. A property subject to a lien cannot be sold without removing it. Liens must be checked in the Tabu extract before any purchase.

A legal document authorising one person to act on behalf of another. A notarised power of attorney is frequently used in real estate transactions when one of the parties cannot be physically present.

The unique identifier of every real estate asset in Israel. The 'gush' is a geographic zone, and the 'hilka' is a specific plot within it. Block and parcel numbers appear in the Tabu extract and in every legal document relating to the property.

A statutory document specifying what may be built on each plot: permitted uses (residential, commercial, industrial), number of floors, building coverage percentages, and so on. It is advisable to check the relevant building plan before purchasing.

The scope of permitted construction on a plot according to the building plan, usually expressed as a percentage of the plot area or in square metres. Unused building rights can add significant value to a property.

A tax paid to the local authority when a change in the urban building plan increases the value of a property (e.g., approval of an additional floor). The levy equals 50% of the increase in value and is generally paid when the property is sold or a building permit is obtained.

Gross area includes the apartment's share of the common property (stairwell, lobby, building structure). Net area is only the space within the apartment's walls. The difference can reach 20%–30%.

A document specifying the construction materials and finishes included in a new-build apartment from a developer: flooring type, kitchen, electrical fixtures, and more. It is an integral part of the purchase contract with a developer.

A municipal tax paid to the local authority for services such as waste collection, roads, and street lighting. Rates vary between local authorities and property types. The owner — not the tenant — is ultimately liable for any unpaid arnona.

A body elected by the building's residents to manage the common property: cleaning, lift maintenance, garden, and more. Monthly building fees are paid to the committee. Before purchasing, check the fee level and the building's overall condition.

A tax paid to the Tax Authority upon acquiring a property. For a first home — exemption on the portion up to approximately ₪2 million, then graduated rates. For an additional property — 8% from the first shekel. Must be paid within 60 days of signing the contract.

A tax paid by the seller on the profit from a property sale (25% of the real profit). A qualifying residential dwelling may be exempt from capital gains tax once every 18 months. It is important to consult a tax advisor before selling.

An assessment of a property's value by a licensed property appraiser. The bank requires an appraisal before granting a mortgage, to verify that the loan amount does not exceed the property's value. Average cost: ₪2,000–₪3,500.

A comprehensive engineering inspection of the property before purchase, conducted by a licensed structural engineer. The inspection identifies structural defects, damp, electrical and plumbing issues. Cost: ₪1,500–₪3,000.

The first payment made by the buyer to the seller upon signing the contract, usually 10%–15% of the property price. The deposit is typically paid by bank cheque. If the buyer withdraws from the deal, they may forfeit the deposit.

A buyer protection mechanism in new-build purchases: the bank financing the project guarantees a refund of amounts paid if the developer fails to complete construction. Mandatory in new projects under the Sale Law.

A graphic plan of the apartment showing the room layout, dimensions, and position within the building. Attached to the purchase contract and forms an integral part of it. It is important to verify that the floor plan matches reality on the ground.

A simple calculation of annual rental income divided by the property price, before deducting expenses. Example: rent of ₪5,000 per month on a ₪1,000,000 property = a gross yield of 6% per year.

Yield after deducting all expenses: municipal tax (arnona), building fees, maintenance, agency fees, insurance, and tax. A more accurate measure of investment viability. In Israel, a net yield of 3%–5% is considered reasonable.

The monthly difference between rental income and expenses (building fees, municipal tax, maintenance, mortgage repayment). Positive cash flow means the property earns more than it costs — by no means guaranteed in Israel.

A property that generates ongoing income from rental payments. Contrasted with a property purchased purely for capital appreciation. Analysis of an income-producing property includes yield calculation, cash flow, and future projections.

A method for calculating the value of an income-producing property based on its annual income. Value = Annual income ÷ Capitalisation rate. The lower the capitalisation rate, the higher the value. Used primarily for commercial real estate.

Purchasing a new home while selling the existing one. The buyer is classified as a 'home upgrader' rather than an investor, and is therefore entitled to an LTV of 70% (higher than the investor's limit). There is an 18-month window to complete the sale of the previous property.

A special protected tenancy right in which the tenant paid a large lump sum in exchange for protection from eviction. Properties with key-money tenants sell below market value because the buyer takes on the complexity of dealing with the protected tenant.