Reverse Mortgage

What is a reverse mortgage, who it's for, conditions, pros and cons, and which banks offer it.

A reverse mortgage (Mashkanta Hafucha) allows Israeli homeowners aged 60 and above to convert their home equity into cash without selling or moving out. It is designed for retirees who own valuable property but need additional income or a lump sum.

How a Reverse Mortgage Works in Israel

Instead of making monthly payments to the bank, the bank pays you — either as a lump sum, monthly payments, or a combination. The loan is secured against your home and accrues interest over time. You continue to live in the property. The loan is repaid when the home is sold, typically after you pass away or move to long-term care.

Who Is Eligible?

In Israel, reverse mortgages are available to homeowners typically aged 60 or older. The property must be your primary residence and must be free of existing mortgages (or any remaining mortgage must be small enough to be paid off from the reverse mortgage proceeds). The loan amount depends on your age and the property's appraised value.

Advantages and Risks

The main advantage is accessing your home equity without moving. This can fund retirement living expenses, medical costs, or home improvements. The risk is that interest compounds over time, potentially consuming a large portion of your home's value. Your heirs will inherit less, and if property values decline, the debt could approach the property value.

Is a Reverse Mortgage Right for You?

Consider it if you are asset-rich but income-poor in retirement, have no heirs you wish to leave the property to, or need funds that other sources cannot provide. Always consult with both a financial advisor and your family before proceeding. Israeli law provides certain protections for reverse mortgage borrowers, but understanding the full implications is essential.