Relocation and Mortgage - What to Do Before You Leave?
Relocation is one of the biggest changes you can make in life. It comes with excitement, anticipation, and sometimes anxiety. Most people planning a move abroad pour tons of time into finding a job, choosing a school for the kids, and figuring out the healthcare system in their destination country — but it's surprising how few stop to think about the financial side they're leaving behind in Israel.
Here's the truth: your mortgage, your bank account, the property you're leaving behind — all of it needs attention before you board the plane. Because once you're abroad, a lot of things get more complicated, more expensive, and sometimes downright impossible.
This article pulls together what's worth doing — for your mortgage and your money — in the months before you relocate. If you don't take care of these tasks now, they'll be far harder to handle later, from abroad.
The financial challenges of relocation
The relocation period is going to be a once-in-a-lifetime experience. A new culture, a different language, every weekend a chance to visit somewhere you've never been. It's exciting, enriching, and worth every moment. But alongside the excitement come financial challenges worth recognizing in advance — because they'll hit your cash flow directly.
If you're a family, ask yourselves honestly: will both partners be able to keep working? In many cases, the partner who didn't initiate the relocation needs time to adjust, learn the language, and find a new job. Sometimes, in the first few years, that partner doesn't work at all — maybe by choice, maybe out of the need to help the kids settle into their new environment: a new school, new friends, a new language. That's a job in itself.
As for your standard of living, assume your expenses will go up. Sure, housing, transportation, and groceries might be cheaper than in Israel. But on the flip side, you'll want to get out and explore the country you're living in — isn't that why you came? Every weekend getaway to a nearby city, every long trip on your time off, is part and parcel of the experience. On top of that, you'll want to factor in flights back to Israel to visit family, and flying to Israel with kids isn't cheap at all. It all adds up to a higher monthly outlay than you planned for.
That's why, in our view, you need a shift in mindset. If you used to think about how to pay off the mortgage as fast as possible or pay as little interest as you could (which, of course, isn't our approach), the mindset now is different — how to use the assets you have in Israel as a financial force multiplier, how to keep your cash flow flexible, and how to prepare for a stretch when income is lower and expenses are higher. And that's exactly what the following tips are here to help you do.
The information in this article is general only and does not constitute tax advice, legal advice, or a substitute for either. Every case has its own circumstances, and tax law — especially around relocation, residency, and real estate transactions — is complex and subject to change. We strongly recommend consulting a real estate attorney who specializes in real-estate taxation, along with a tax consultant, before making any decisions.
1. Consider extending your mortgage term
During relocation, your monthly cash flow is going to change. Your income may be different (sometimes higher, but not always), your expenses will definitely change, and there's an adjustment period when everything is a bit up in the air.
On top of that, if you're renting out your property in Israel, you may have to pay rental income tax — a tax you might have been exempt from while you lived in the country. That means your net rental income will be lower than you expected, while the mortgage stays the same.
Your entire income-and-liabilities picture is about to shift. Since there's only so much you can do to boost income when moving to a new country, the path to cash flow relief runs through cutting costs — that is, refinancing the mortgage and stretching it over a longer term.
A longer mortgage term lowers the monthly payment and frees up cash flow. True, you'll pay more interest in total over the life of the loan — but during a relocation, cash flow flexibility is worth a lot. Better to pay a little more interest than to find yourself squeezed for cash every month while trying to get on your feet in a new country.
2. Ask yourself: is it even right to keep the property?
This is a question many people avoid, because the property in Israel stands for security, roots, and a plan to return. But let's look at the numbers honestly: the rental yield on a property in Israel is low — usually between 2% and 3.5% gross, and after taxes, maintenance, and vacancy periods, it can drop even further.
Beyond the yield, managing a property from afar is a real headache. Think about it: who'll find new tenants when the current ones move out? Who'll deal with the pipe that bursts at three in the morning? Who'll handle the building management company? Every little problem you'd have solved with a phone call in Israel turns into a major ordeal when you're several time zones away.
3. If you know the property no longer suits you - consider buying a new-build from a developer now
This point follows directly from the previous one. If you've concluded that the current property won't suit you when you return, and you plan to sell, consider buying a new-build from a developer right now, before you leave.
Why on earth would you pile on yet another huge complication right as your life is about to be turned upside down? Because this tip is worth hundreds of thousands of NIS.
When an Israeli resident buys a sole dwelling or substitute dwelling, they're entitled to reduced purchase tax brackets.
By contrast, when a foreign resident (someone who has lived outside Israel for two years — even an Israeli with an ID card) buys a sole dwelling or substitute dwelling, they're not entitled to the reduced tax brackets — and they're charged the purchase tax brackets of a second-home / investment-property buyer.
That's a gap of hundreds of thousands of NIS in tax — one you can avoid by planning ahead.
So why a developer specifically? Because a new-build purchase from a developer lets you pay in installments spread over the construction period (which can run two to three years), effectively "reserving" a property that'll be waiting for you when you return — all while you still enjoy substitute-dwelling status for purchase tax purposes.
Sell your current property and buy from a developer while you're still an Israeli resident:
- You'll pay low purchase tax (sole dwelling / substitute dwelling)
- You'll free up down payment capital you can put toward relocation costs
- Meanwhile, a new property is being built and waiting for your return
4. Think about buying a property abroad - and plan the down payment now
Buying a home in your destination country is a worthy, legitimate financial goal. In many countries, mortgage interest is deductible for tax purposes — a benefit that doesn't exist in Israel. And purchase tax (or its equivalent) in many countries is significantly lower than the purchase tax on a second property in Israel.
But to buy a property abroad, you'll need a down payment. Here's the key point: getting financing — a general-purpose loan, a renovation loan, or a bigger credit facility — is far easier while you're still an Israeli resident with proven income in the country. Once you're a foreign resident, Israeli banks get very difficult, and banks abroad want a local credit history you don't have.
The months before you relocate are a window of opportunity to line up financing. Figure out the down payment you'll need, and if necessary, take out loans on good terms while the banks still see you as a "regular" Israeli customer. Once you leave, this door may close.
5. Time the sale and purchase of assets correctly - in Israel and abroad
If you already know you plan to sell the property in Israel and buy one abroad, watch the order of operations. Make sure you sell the property in Israel first, and only then buy abroad.
Why? You may owe betterment tax on the sale of the Israeli property — even if it's your sole dwelling, and even if you meet every condition for a betterment tax exemption. Once you've bought a property abroad before selling in Israel, the Israeli property is no longer "your sole dwelling," and you lose the exemption. These are significant tax sums you can avoid entirely just by getting the timing right.
Betterment tax (real-estate capital gains tax) is a tax levied on a property seller for the appreciation (the real profit) earned on the sale. It's calculated as the difference between the sale price and the purchase price, net of recognized expenses. Under certain conditions a property owner is entitled to an exemption from betterment tax — the most common being that they held a sole dwelling for a defined period.
6. Refinance your mortgage to a "relocation-friendly" bank
Not all banks are created equal when it comes to managing a mortgage remotely. Some require a physical trip to the branch for every change — signing documents, verifying your identity, updating details. Others allow remote digital signatures, full online management, and a more flexible attitude toward customers living abroad.
This may seem like a minor detail, but the difference is huge. Imagine needing to tweak your mortgage — say, switching from one loan track to another, or making a partial early prepayment — and finding out the bank wants you to fly to Israel to sign. That's the difference between being able to run your financial life from anywhere in the world and being stuck with terms that don't work for you for the entire relocation.
Before you leave, ask your bank what its policy is for customers abroad. Can you sign remotely? Are there limits on online transactions? If the answers aren't good enough, now's the time to consider refinancing to a bank that offers more flexibility. The cost of refinancing will pay for itself in convenience and saved headaches.
Also take a look at the mortgage itself. Check whether it's unrestricted in amount and time. If it is, you'll have to sign a new mortgage every time you want to make a change (instead of simply instructing the bank).
7. If you have a mortgage in two countries - balance the resources between them
If you've also bought a property abroad, you may be carrying a mortgage in Israel and one in your destination country at the same time. When that happens, it's well worth looking at the overall picture rather than treating each mortgage separately.
The central question is: which country has the better interest rates? In the country where rates are lower, it makes sense to increase the mortgage — and at the same time, to reduce the mortgage in the country where rates are higher. In other words, if the rate abroad is significantly lower than in Israel, consider taking out a larger mortgage abroad and using the down payment capital you've saved to pay down the mortgage in Israel — or the other way around.
Remember, you're now operating in two different financial markets. Use that to your advantage: check the interest rates, the repayment terms, and the tax benefits in each country, then split the total financing in a way that maximizes your overall advantage, instead of managing each mortgage as if it stood alone.
8. Open several bank accounts - in Israel and around the world
This tip isn't directly about the mortgage, but it's critical for anyone going through a relocation. International money transfers to and from Israel are a bureaucratic nightmare. Banks ask questions, demand supporting documentation, cap the transfer amount, and sometimes just won't approve it — even when it's your own money you're sending to yourself.
The more active bank accounts you have in Israel, the more flexibility you have. If one bank refuses to transfer a certain amount, another may approve it. If one bank piles on burdensome conditions, you can work through a different one.
During relocation, continuous, uninterrupted access to financial services matters more than the fees you pay. Within reason, of course, but the principle is clear: what good is a "cheap" account if the bank blocks your international transfer right when you need to pay rent in the new country? What good is a low interest rate on savings if you can't withdraw the money remotely? When you choose banks and financial service providers ahead of a relocation, prioritize reliability, digital accessibility, and international service — even if it costs a little more.
Beyond Israeli banks, it's well worth opening accounts on international financial platforms like Wise or Revolut. These were built from the ground up for people who live and work across borders: low-fee currency conversion, fast international transfers, multiple currencies in one account, and local account details in different countries. When an Israeli bank refuses to transfer money, or its fee is outrageous, a Wise account can be the fix that saves you days of frustration.
Open all the accounts — Israeli and international — while you're still in Israel. Opening an Israeli bank account remotely as a foreign resident is a far more complicated process, and sometimes impossible. Keep the accounts active — deposit a small amount and run a transaction now and then — so the bank doesn't freeze them for inactivity.
In summary
Relocation is an exciting opportunity, but it also takes serious financial preparation — especially when it comes to the mortgage and the property in Israel. Most of what we covered here simply can't be done once you've left. A new bank account, mortgage refinancing, taking out loans, selling a property on good terms — all of it is easier, cheaper, and sometimes only possible while you're still in the country.
So our advice is simple: don't wait. Even if the relocation feels far off, even if it isn't fully locked in yet, start tackling the financial side as early as you can. Review your mortgage, open accounts, take an honest look at the property question. The sooner you do, the smoother the move will be — and the freer you'll be to focus on what really matters: building your new life.
To see how mortgage changes affect your cash flow, try our mortgage calculator — it'll help you simulate different scenarios and make informed decisions. For more on managing cash flow, see the article on monthly repayment planning, and if you're weighing a refinance, it's worth reading up on mortgage refinancing too.
Good luck with your relocation.