Or, in other words: you decide when to change your interest rate
A mortgage for up to 30 years. The interest rate is updated at predetermined points that you can select at the time of taking out the mortgage: every year, every 2.5 years, or every 5 years.
- People who are anticipating an increase in income and may wish to repay part of their mortgage before its end date.
- Those expecting to see a decrease in the interest rate.
Main Advantages
- This mortgage benefits those who estimate that the interest rate is likely to be lower in the future.
- It is possible to pay off the loan early without incurring penalties (other than an NIS 60 handling fee) at the points when the interest rate is updated. If early repayment is made outside these update points (which occur every year, 2.5 years, or 5 years, depending on the chosen mortgage), an early repayment fee may be involved. In such a case, the fee will be calculated in relation to the date of the next interest rate update, and not in relation to the end date of the mortgage.
Payment Method
This type of mortgage can be repaid in accordance with the Spitzer, Grace, or Balloon schedule.
Payment Arrangements
The mortgage is repaid through an account debit authorization. The repayments are made once a month, on either the 1st or 15th of the month, whichever you prefer.
Interest Rate Change Benchmark
At the time of the interest rate update (every year, 2.5 years, or 5 years), the interest rate will be determined according to the interest rate benchmark with a fixed addition, as was determined at the type the mortgage was originally approved:
- Interest Rate Updates Every Year – The average real yield of index-linked variable-rate government bonds with a maturity of one year, which is published periodically by the Bank of Israel in the real yield table derived from estimating the zero curve (monthly averages, percentages) in the “indexed average” line, with an addition of 5%.
- Interest Rate Updates Every 2.5 Years Based on the Benchmark – The average of the average real yield of index-linked government bonds with a maturity of two years and the aforesaid yield with a maturity of three years and an addition of 5%. The yield rates are published periodically by the Bank of Israel in the real yield table derived from estimating the zero curve (monthly averages, percentages) in the “indexed average” line.
- Interest Rate Updates Every 5 Years Based on the Benchmark – The average real yield of index-linked government bonds with a maturity of 5 years, which is published periodically by the Bank of Israel in the real yield table derived from estimating the zero curve (monthly averages, percentages) in the “indexed average” line, with an addition of 5%.
