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Luxury real estate Israel - Homes and properties - Mortage



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Mortgage
The lien placed against real property, and its recording in the Land Registry books, is called a mortgage. The mortgage represents the attachment of the property as a guarantee of payment of the owners debt or that of the owner of the leasing rights. The most common mortgage is that of a mortgage bank, which provides a loan in favor of the property buyer, thereby enabling the buyer to purchase the property. The mortgage forms a guarantee to the lending bank, whereby the bank can take the property in the event that the buyer stops paying the loan. The bank can do so without the need to appeal to the courts, and can realize the mortgage directly via the Debt Execution Office.

The buyer of property that has a mortgage recorded on it needs to know that, if the seller does not pay off the debt, the lender will be entitled to take the property. The fact that the property has been sold in the meantime does not cancel the rights of the lender. Therefore, the buyer must verify that the seller removed the mortgage from the property upon receiving the purchase amount.

A party can mortgage his/her real property in order to guarantee someone elses debt. In addition, real property can be used by its owners as leverage to obtain funds, and more than one mortgage can be recorded on the same piece of real property. In such a case, when the property is sold in order to pay the loan to the mortgage-holders, the amount needed to pay off the first mortgage is paid first and, from any balance remaining, the next mortgage-holder is paid.

Usually, a mortgage is recorded to guarantee a debt of a defined amount (plus cost of living differences and interest). However, a mortgage is sometimes recorded to guarantee a debt in an unlimited amount. This is usually done when the borrower is interested in receiving additional loans in the future, without the need to record a new mortgage each time. The banks prefer to record the mortgage without limiting the amount, both to provide them with freedom of action in the future in the event of financial difficulties on the part of the borrower, and also to save the cost of additional stamp taxes. Stamp tax on a mortgage is unlimited in amount, and is a fixed fee of only 5 NIS.

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