Mortgage

The Israeli mortgage market is regulated by the Bank of Israel, which sets limits on loan-to-value ratios, repayment-to-income ratios, and the mix of interest tracks. A mortgage is typically the largest loan a person takes in their lifetime, so a deep understanding of the available tracks, repayment methods, and associated costs is critical.

Whether you are a first-time buyer or upgrading your home, our guides will help you make informed decisions, compare offers from different banks, and save tens of thousands of shekels over the life of your mortgage.

Interest Tracks

Israel has four main interest tracks: Prime (a variable rate linked to the Bank of Israel rate), fixed unlinked, fixed CPI-linked (Consumer Price Index), and variable every 5 years. Each track carries different risks and opportunities. The Prime track is popular when interest rates are low but exposes the borrower to rate hikes. A fixed unlinked track provides full certainty but usually costs more.

Repayment Methods

The Spitzer method (fixed repayment) is the most common — the monthly payment stays constant, with most of it going to interest early on and gradually shifting toward principal. Under the equal principal method, the principal is spread evenly so the payment decreases over time. Other methods include bullet (a lump-sum principal payment at the end) and grace (deferring principal payments).

Required Insurance

Every mortgage borrower must carry two types of insurance: life insurance (covering the mortgage balance in case of death) and property insurance (protecting the asset against damage). Importantly, you are not obligated to buy insurance from the bank — external insurance is usually significantly cheaper. Comparing insurance options can save thousands of shekels over the life of the mortgage.

Tips for Buyers

Three key tips: First, get quotes from at least three banks and consider hiring an independent mortgage advisor. Second, compare not just the interest rate but the total cost of the loan (total payments over its lifetime). Third, check the option to refinance your mortgage every few years — changes in market conditions can create opportunities for significant savings.