Bridge Financing When Selling and Buying in Israel
Bridge Financing When Selling and Buying in Israel
Many American owners in Israel eventually want to move from one property to another, perhaps upsizing as a family grows, downsizing after children leave or shifting from an investment apartment to a home for aliyah. The challenge is timing. The new seller wants payments on a fixed schedule, while the buyer of your current property pays on theirs, and the two rarely match. Israeli banks offer bridging loans for this situation, and lawyers can structure contracts to reduce the gap. Each option has costs and risks, especially for foreign residents. This guide explains the tools and the thinking behind a safe sequence.
The Timing Problem
In a typical Israeli sale, the buyer pays in several installments, with the final payment often at handover. In your new purchase, the seller will expect significant payments soon after signing. If you need the proceeds of the sale to fund the purchase, you may find yourself short for a period that can stretch for months.
Aligning the Contracts
The first tool is careful drafting. Your lawyer can try to negotiate payment schedules on both contracts so that money from the sale arrives before large payments on the purchase fall due. Sometimes a later handover date on the purchase, or an earlier payment from your buyer, solves most of the problem.
Aligning the contracts costs little and should be attempted before any loan is considered. Sellers who are themselves buying elsewhere may welcome flexibility, and a candid conversation between lawyers sometimes reveals that both sides have a timing problem that can be solved together.
Bridging Loans From Israeli Banks
Israeli banks may offer a bridging loan secured on the property being sold, designed to be repaid from the sale proceeds. The loan is usually short term, and its terms depend on the bank, the property and the borrower's profile. Foreign residents may face stricter conditions.
Some banks structure this as a mortgage on the existing property combined with a new mortgage on the purchase, with the first loan cleared on completion of the sale.
Signed sale agreement or strong evidence of a pending sale
Appraisals of both properties
Income documents and US tax returns
A clear repayment plan from the proceeds
Buying Before Selling
Some owners buy first and sell afterwards, which gives time to find the right new home but creates the risk of holding two properties longer than expected. Purchase tax can also be affected when you own more than one residence for a period. Israeli rules have provisions for people replacing a home within certain timeframes, but eligibility depends on your status and circumstances, so seek advice from an Israeli tax advisor.
Selling Before Buying
Selling first removes the financing gap and the uncertainty about sale price, but you may need temporary housing and could face a rising market while you search. For families living partly in the United States, a short gap may be easier to manage than for those living in Israel full time. Storage for furniture and a short-term rental near schools or work can make the interval more comfortable.
Using US Resources as a Bridge
Some Americans use funds or credit in the United States as a temporary bridge, repaying it when the Israeli sale completes. This adds currency exposure and the risks of the US loan. It should be weighed against the Israeli bridging options with a financial advisor who understands both systems.
Protecting Yourself
Build in a margin of time and money. Sales can be delayed by buyers' financing, legal issues or tax approvals. Avoid signing a purchase that depends on a sale you have not yet agreed. Your lawyer, mortgage advisor, Israeli tax advisor and US CPA should review the combined plan. We do not provide financial or tax advice, and outcomes depend on circumstances.
Frequently asked questions
Is bridge financing available to foreign residents?
Some Israeli banks offer it, subject to their criteria for foreign residents. A mortgage advisor can tell you which banks are currently open to such requests.
What happens if my sale falls through?
You may need to find another buyer or refinance the bridge into a longer loan. Planning a fallback before you commit is essential.
Can my buyer's payments go directly to my seller?
In some cases lawyers arrange coordinated payments, but this requires careful drafting and agreement from all parties.
Does holding two homes affect taxes?
It can affect purchase tax and future capital gains in Israel, and reporting in the United States. Consult an Israeli tax advisor and your US CPA.
Elkayam Group
Elkayam Group is led by the third generation of a family that began in industry in the forties and now runs Kobi Elkayam Real Estate Ltd from Rival Street 37 in Tel Aviv. Its activity spans development, urban renewal, TAMA 38, pinui-binui and combination deals, supported by backing companies able to issue guarantees. Speaking Hebrew, English and French, our people have experience with transactions in which timing is as important as price.
Planning to sell and buy? Contact us to map a sequence that keeps both transactions on track.
+972-53-658-4252 · support@kobielkayamrealestateltd.com · Rival St 37, Tel Aviv