An amortization schedule (לוח סילוקין) determines how the loan is repaid over time. In Israel there are two main methods.
Spitzer: the fixed payment
The monthly payment is fixed (in a fixed, non-linked loan). At first most of the payment goes to interest and a little to principal; over time the ratio reverses. This is the most common method.
Equal principal: the declining payment
Each month you repay the same amount of principal, plus interest on the balance. So the payment starts high and goes down every month.
Example: NIS 1,000,000, 4.6% interest, 25 years
| Spitzer | Equal principal | |
|---|---|---|
| First payment | about NIS 5,620 | about NIS 7,170 |
| Last payment | about NIS 5,620 | about NIS 3,350 |
| Total interest | about NIS 685,000 | about NIS 577,000 |
(Calculated at a fixed, non-linked rate, without fees.) With equal principal you pay about NIS 108,000 less interest, but the first payment is about NIS 1,550 higher.
Check your own numbers with the Spitzer vs. equal principal calculator (in Hebrew).
Which is better?
- Spitzer – when you want a comfortable, predictable payment, especially in the first years.
- Equal principal – when your income is high today and you want to save interest, or when a drop in income is expected (for example approaching retirement).
Good to know
With Spitzer the principal goes down slowly in the first years. If you sell or refinance after a few years, the balance will be higher than you might have thought.