Israeli Mortgage Tracks Explained
Understand the different mortgage tracks available in Israel — fixed, variable, linked, unlinked and more.
Fixed-Rate, Unlinked Mortgage
- Rate remains fixed for the agreed period or term
- Principal is not linked to inflation
- Offers repayment certainty
- May carry early repayment charges
Fixed-Rate, CPI-Linked Mortgage
- Interest rate is fixed
- Principal may change in line with the relevant index
- Initial repayments may appear lower
- Outstanding balance may rise when the index rises
Prime-Linked Mortgage
- Interest moves with the relevant prime reference
- Payments can rise or fall
- Usually not CPI-linked
- Payments and total borrowing costs may increase if the applicable interest rate rises
Variable-Rate, Unlinked Mortgage
- Rate resets at specified intervals
- Principal is not CPI-linked
- Payments may change after each reset
Variable-Rate, CPI-Linked Mortgage
- Rate may reset at defined intervals
- Principal may also be index-linked
- Both repayment and outstanding balance can change
Foreign-Currency or Foreign-Currency-Linked Track
- May be relevant where income is earned in another currency
- Currency movements create additional risk
- Availability and bank criteria vary
- Applicants must understand exchange-rate exposure
Interest-Only or Deferred-Capital Arrangements
- May be available only in certain circumstances
- Monthly payments may cover interest without reducing capital
- A clear repayment strategy is required
- Not suitable for every borrower
Grace Period (גרייס)
- Some arrangements temporarily defer capital or payments
- Subject to bank approval and increased overall cost
Balloon or Bullet Repayment
- Some loans may have a significant amount repayable later
- A clear exit strategy is required
Mortgage Mix (Tamhil)
An Israeli mortgage is commonly divided into several tracks rather than consisting of one single rate. Borrowers combine tracks to balance:
Under Bank of Israel restrictions, no more than two-thirds of the mortgage may generally be placed on variable-rate tracks, meaning at least one-third must be on a fixed-rate basis. The exact split depends on the bank, the borrower's circumstances and the applicable rules at the time.
The most suitable mortgage structure depends on your income, currency, financial plans, appetite for risk and the bank's available terms. We do not present one mortgage mix as suitable for everyone.
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