Currency management is a critical but often overlooked aspect of foreign property ownership. When your income is in dollars or francs but your mortgage is in shekels, exchange rate movements directly impact your effective costs.
Understanding Currency Risk
If the shekel strengthens against your home currency, your mortgage payments effectively increase. A 10% currency move means 10% higher payments in your currency. Over a 20-year mortgage, these fluctuations can significantly impact total cost.
Hedging Strategies
Forward contracts lock in exchange rates for future payments. Currency options provide protection while allowing benefit from favorable moves. Regular scheduled transfers can average out fluctuations over time.
Practical Approaches
Maintain a buffer in shekels to cover several months of payments. This protects against short-term volatility. Transfer larger amounts when rates are favorable. Consider setting rate alerts to catch good opportunities.
Currency Account Options
Multi-currency bank accounts allow you to hold shekels and your home currency. Some Israeli banks offer accounts for foreign residents. International transfer services like Wise often offer better rates than traditional banks.
USD vs CHF Considerations
The USD-ILS pair tends to be more volatile than CHF-ILS. Swiss franc stability can be advantageous but remember it's not immune to fluctuations. Consider your income currency's historical relationship with the shekel.
Tax Implications
Currency gains or losses may have tax implications in your home country. Consult with a cross-border tax advisor to understand reporting requirements and potential deductions.