If you are looking to buy a home in Israel, understanding the various mortgage options available can help you make an informed decision. Below is a basic overview of common types of mortgages in Israel:
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- Index-Linked Mortgage: Your monthly payments adjust based on changes in the cost of living. You can choose between fixed, variable, or semi-fixed interest rates.
- Non-Index-Linked Mortgage: Not affected by changes in the cost of living or any currency. Options include mortgages with a prime interest rate, a fixed interest rate, or a variable rate based on a different benchmark.
- Currency-Linked Mortgage: Linked to a foreign currency, like the dollar or euro. The interest rate changes with the LIBOR rate, and payments are made in that foreign currency.
- Eligible Mortgage: This is less relevant for foreign citizens and is mainly for individuals with a special eligibility certificate from the Ministry of Construction and Housing.
- Mortgage for Any Purpose: A loan you can use for any reason, secured by a property.
- Bridging Loan: A short-term loan used until you get funds from selling a property or another source. You can either pay off the loan at the end with all interest included or pay interest during the loan period and repay the principal in full at the end.
- Prime Track Mortgage: A mortgage with a variable interest rate based on the prime rate (Bank of Israel interest rate + 1.5%). The rate changes with the Bank of Israel’s interest rate.
