Fact-checked and updated:
Your mortgage payment and outstanding balance are different figures. Review each loan component separately: rate, indexation, term and repayment schedule.
A fully fixed, unlinked mortgage exists
One Bank of Israel standard comparison basket is 100% fixed-rate, unlinked borrowing. It is therefore incorrect to say the law always requires mixing rate types. See the official mortgage guide. Actual offers and approval depend on the bank and borrower.
Why can the balance rise?
Indexation can increase the principal outstanding on a CPI-linked component. This does not apply to every mortgage. Prime refers to a variable interest rate: changing interest and indexing principal are different mechanisms.
For illustration only, 3% of an assumed linked balance of ₪1,000,000 is ₪30,000. This isolates one index change and ignores repayments, interest and contract rules. It does not predict your balance after a year.
Compare like with like
- List every component and identify what can change.
- Compare offers for the same amount and term.
- Request a repayment schedule and scenarios for higher rates, index changes or lower household income.
- Keep room for living costs and unexpected repairs; bank approval alone is not your household budget.
Early repayment and refinancing
Ask the bank for a current redemption quote itemising fees. Neither a universally free exit nor an inevitable large penalty should be assumed. Compare any savings with costs and the remaining term.
A mortgage is secured borrowing. Saying the bank owns the apartment until repayment misstates the position. Have your lawyer check the specific property’s registered rights and encumbrances.
Editorial correction: claims about compulsory rate mixing, bank ownership and guaranteed fees have been corrected. This guide explains concepts rather than selecting an individual loan.