Working With Foreign Currency
When Buying Property in Israel
Financial transactions can become quite tricky when working with more than one currency, a different bureaucratic system, and a different language.
There are various payment terms and plans to discuss when purchasing property in Israel; however, nearly all payments are made in Israel’s currency, the New Israeli Shekel.
As a foreigner, what options do you have as far as payment methods go?
Familiarize Yourself With the Currency
Of course, it is important to familiarize yourself with Israel’s currency. The New Israeli Shekel is a system of banknotes of 20, 50, 100, and 200 shekels, and coins of 1 agora, ½ shekel, 1, 5, and 10 shekels.
Firstly, you will need to settle on a payment plan with the contractor or seller. This will be clearly outlined in your contract with dates to follow.
Open an Account
One option would be to open an Israeli bank account. The type of bank account you open will depend largely on whether or not you are an Israeli citizen, or plan to become one.
Some of the highly recommended banks for Olim Chadashim are: Mizrahi Tefahot, Bank HaPoalim, Discount Bank, and Bank Leumi.
Do some research and request a meeting with a banker that speaks English to decide which bank is right for you and if you can open an account. If you plan on taking out a mortgage, then you must open an account with the bank with which you are taking out the mortgage.
Another option when purchasing a property could be to open an account with a currency transfer company, like IsraTransfer, that can assist you with all of your large payments involved in purchasing property in Israel, without needing to open an Israeli bank account.
The other massive advantage is that the exchange rate with companies like IsraTransfer is much better than that of the bank. As always, feel free to speak to friends and family who have navigated the same situation, as well as consult your lawyer who will advise you as to which option is best for you.
Alternative Options for Exchanging Foreign Currency
You can send a wire from your foreign bank account directly to your Israelli account or to a lawyer;s escrow account. These rates and fees can often be very expensive depending on your bank.
An issue to consider with this option is that the wire process takes a few days to finalize, and the exchange rate and fees associated with your individual bank may change; this means that you may need to owe additional money once the transfer has been complete, or even that you will have overpaid (in which case you can work out applying that money to your next payment).
Also, clearing your money can be harder when doing it directly yourself as the transfer companies usually clear money through money laundering regulations.
Sending Payments Online
There are various methods of sending payments through online platforms if you choose not to work with the bank directly; however, these transactions will be limited to certain amounts and you may have to do more than one at a time.
Use Your Resources
The most important factor to note is to make sure that you understand all of the details in your native language. If you go to an Israeli bank or need to speak to someone on the phone, make sure to ask for an English speaker. Though it can be a bit complicated to navigate, there are many resources available to make the payment process as smooth as possible.
Note: This blog is purely for informational purposes and we are not advising you on how to send your money. Please do your own research and due diligence!