Please note: advisory meetings and the service itself are provided in Hebrew only. These guides are here so you can read and understand the topic in your own language.
When you receive offers from several banks, the natural tendency is to choose the one with the lowest monthly payment. But a low payment can hide a very expensive mortgage.
Three ways to lower the payment (and pay more)
- Extending the term – 30 years instead of 20 lowers the payment but adds a lot of interest.
- Loading up on linked tracks – a low starting rate, but the principal grows with the CPI. The fixed linked track
- Choosing a lot of prime – cheap today, but exposed to rate rises. The prime track
An example
A mortgage of NIS 1,000,000 at 4.6%: - Over 20 years: a payment of about NIS 6,380, total interest of about NIS 531,000. - Over 30 years: a payment of about NIS 5,130, total interest of about NIS 846,000.
The payment is about NIS 1,250 a month lower, but you pay about NIS 315,000 more interest.
How to compare properly
- Total expected repayment – under a reasonable inflation assumption.
- Monthly payment – today and in a rate-rise scenario.
- Flexibility – how much it will cost to exit the tracks if you sell or refinance.
- The same mix – compare offers on the same mix and the same terms.
Elia's tip: Ask every bank for the "total cost of credit" and the "total expected payments" for each track. That is the number that shows who is really cheap.
Check for yourself: monthly payment calculator (in Hebrew).
This article is general information and is not personal advice or a commitment. Rules, interest rates and taxes change from time to time, so check the current situation and your own figures before any decision.