Spitzer Loan — Complete Guide
Comprehensive guide to the Spitzer repayment method: how the amortization schedule works, pros and cons, who it suits, tips for saving on interest, and combining with other mortgage tracks.
What Is the Spitzer Repayment Method?
The Spitzer method (also called the annuity method) is the most common mortgage repayment structure in Israel and worldwide. Its defining feature is a fixed monthly payment throughout the entire loan term. Each payment contains both principal and interest, but the ratio between them shifts over time.
In a Spitzer loan, the bank calculates your monthly payment using the PMT formula, which factors in the principal amount, the interest rate, and the number of payments.
How the Amortization Schedule Works
Because the outstanding balance is highest at the start, the interest component of each payment is large initially. As you gradually pay down principal, the interest shrinks and a greater share of each payment goes toward reducing the debt.
For example, on a 1,000,000 NIS loan at 5% over 25 years, your fixed monthly payment would be approximately 5,846 NIS. In the first month, about 4,167 NIS goes to interest and only 1,679 NIS to principal. By the final year, nearly the entire payment goes to principal.
The PMT Formula
The PMT formula calculates the fixed payment as: PMT = P * r * (1+r)^n / ((1+r)^n - 1), where P is the principal, r is the monthly interest rate, and n is the total number of payments.
You do not need to calculate this yourself — every bank and mortgage calculator does it automatically — but understanding the concept helps you see why early payments are interest-heavy.
Advantages of the Spitzer Method
The main advantage is predictability. Your monthly payment stays the same from the first month to the last, making budgeting straightforward. This stability is especially valuable for families with fixed incomes.
Most banks default to Spitzer, and it integrates smoothly with all interest types available in Israel.
Disadvantages: Higher Total Interest
The trade-off for stable payments is that you pay more total interest over the life of the loan compared to the Equal Principal (Keren Shava) method. Because the principal balance decreases slowly in the early years, interest accumulates on a larger outstanding amount for longer.
On a typical 25-year mortgage, the difference can amount to 100,000-150,000 NIS in additional interest.
Who Is Spitzer Best For?
Spitzer is ideal for borrowers who prioritize stable, predictable monthly payments and whose income is relatively fixed. It suits first-time buyers, young families, and anyone who prefers consistent expenses over time.
If your income is expected to grow significantly or you have strong cash flow early on, you might consider Equal Principal instead.
Spitzer Across Different Interest Tracks
Keep in mind that when Spitzer is combined with a variable interest track (like Prime), the monthly payment is only fixed as long as the rate stays constant. A rate change will recalculate the payment for the remaining term.
On fixed-rate tracks, the payment truly never changes. This distinction is important when planning your mortgage mix.
Frequently Asked Questions
+−What is the Spitzer repayment method?
Spitzer (also called the annuity method) is a mortgage repayment structure with a fixed monthly payment throughout the loan term. Each payment contains both principal and interest, with the ratio shifting over time.
+−Why are early Spitzer payments mostly interest?
Because the outstanding balance is highest at the beginning, the interest component is large in early payments. As you pay down principal, less interest accrues.
+−How much more interest do I pay with Spitzer vs. Equal Principal?
On a typical 25-year mortgage, Spitzer results in approximately 100,000-150,000 NIS more in total interest compared to Equal Principal.
+−Is the Spitzer payment truly fixed on a Prime track?
No. When combined with a variable interest track like Prime, the payment is recalculated whenever the rate changes. It is only truly fixed on fixed-rate tracks.
+−What is the PMT formula?
PMT = P * r * (1+r)^n / ((1+r)^n - 1), where P is the principal, r is the monthly interest rate, and n is the total number of payments.
+−Who is Spitzer best for?
Spitzer is ideal for borrowers who prioritize stable, predictable monthly payments. It suits first-time buyers, young families, and anyone with a relatively fixed income.
+−Is Spitzer the default in Israeli banks?
Yes, most Israeli banks default to Spitzer. You typically need to specifically request other repayment methods.