Mortgage glossary
for every step of your journey

A long-term loan used to purchase real estate, with the property serving as collateral. The loan is repaid in monthly installments over a period of up to 30 years.

A table showing how each monthly payment is divided between principal and interest. Early payments mainly cover interest; later payments mainly repay principal.

The bank considers your down payment, payment-to-income ratio, credit history, property type, age, employment stability and chosen mortgage track.

An index published by Israel's Central Bureau of Statistics that reflects average changes in the prices of goods and services. For a CPI-linked mortgage, the outstanding principal changes with the index.

The mortgage amount divided by the property's value. A NIS 1.5 million mortgage on a NIS 2 million property has an LTV of 75%. A higher LTV generally means a higher interest rate.

The bank reviews stable income, positive credit history, sufficient equity, a suitable payment ratio (up to one-third of income), and the borrower's age relative to the loan term.

Common tracks include fixed unlinked, fixed CPI-linked, prime-rate, rates resetting every five years and variable CPI-linked loans. Each suits a different risk profile.

Transferring an existing mortgage from one property to another, usually when selling one home and buying another. This can preserve the original terms and save early repayment fees.

A loan for property owners over 60 in which the bank makes monthly payments to the borrower against a property lien. It is repaid when the property is sold or the borrower dies.

A property-purchase loan from a financial institution other than a bank, such as an insurer or pension fund. Its terms may differ from those offered by banks.

An interest rate that changes during the loan term with market conditions. The rate may rise, but if it falls, the monthly payment also decreases.

An interest rate set at the start of the loan that remains unchanged throughout its term. It provides payment certainty, but is usually initially higher than a variable rate.

Factors include the Bank of Israel rate, market conditions, mortgage track, LTV, borrower profile, loan term and amount, and competition between banks.

A repayment method with equal principal payments and interest calculated on the decreasing balance. Payments decline over time. It suits borrowers seeking lower total interest costs.

A numerical assessment of a person's credit risk based on payment history, debts and other credit database information. A high score can help secure better mortgage terms.

A central database managed by the Bank of Israel containing individuals' credit commitments. Banks use it to assess risk and determine loan terms.

A government program offering discounted homes through a lottery. Eligible buyers receive special mortgage terms and higher financing ratios.

A mortgage track with an interest rate fixed for the entire term and principal not linked to the CPI. It provides certainty about the monthly payment.

A rate based on the Bank of Israel rate plus a fixed margin, usually 1.5%. It changes automatically with the central bank rate. This popular, flexible track can be repaid without a fee.

A track with a fixed interest rate but CPI-linked principal. The monthly payment may change with the index.

A person who undertakes to repay the mortgage if the borrower does not. A paying guarantor is fully liable for the debt; a supporting guarantor is liable only if the primary borrower cannot pay.

A legal document recorded in the land or mortgage register that establishes the property as collateral for the bank. It is removed only after the loan is fully repaid.

A person's total financial commitments to financial institutions, including loans, credit, guarantees and approved limits. The bank reviews this total before approving a mortgage.

A short-term loan covering the period between buying a new home and selling the previous one. It bridges the cash-flow gap and helps complete the purchase on time.

Israel's most common repayment method. On fixed-rate tracks, the monthly payment stays constant, while its principal-to-interest split changes: more interest at first and more principal later.

Money that is temporarily unavailable for use, such as a payment made to a developer before a property is delivered. This should be considered in financial planning.

The buyer's own contribution to the transaction, beyond the mortgage. In Israel, a first-home buyer needs at least 25% equity (a maximum of 75% financing).

A loan with interest-only or partial-interest payments during the term, followed by full principal repayment in one final payment. It is less common in ordinary mortgages.

A bank fee for early repayment of fixed-rate mortgage tracks, calculated from the difference between the contracted and current rates. It is not charged on prime-rate tracks.

A period in which the borrower pays only interest (partial grace) or nothing (full grace). Principal does not decrease during this period. Common during construction of a developer-built home.

A loan secured by an existing property for purposes other than buying a home, such as renovation, debt repayment or business financing. Its terms differ from a standard mortgage.

A property's value is assessed by a certified appraiser. Banks require an appraisal before granting a mortgage. A preliminary valuation helps assess feasibility before proceeding with a transaction.

Repaying an existing mortgage and replacing it with a new one on better terms. Worth considering when market rates fall, finances improve or several years have passed since the original loan.

Two policies are required: life insurance covering the outstanding mortgage on death, and building insurance covering property damage. Banks require both, but they can be purchased from any insurer.

An index reflecting changes in Israeli construction costs, including materials and labor. It matters when buying from a developer because part of the purchase price may be linked to it.

A detailed table of all mortgage payments throughout the loan term, showing each payment's date, amount, principal and interest portions, indexation and remaining balance.

A bank document giving preliminary, conditional approval for a mortgage of a specified amount. Usually valid for 45 days. It is important to obtain before committing to a property.

The mortgage amount divided by the property price. Bank of Israel limits are up to 75% for a first home, 70% for a replacement home and 50% for an investment property.

Income remaining after fixed commitments such as loans and maintenance payments. The bank checks that the monthly mortgage payment does not exceed one-third of disposable income.

Total monthly repayments, including the requested mortgage, divided by net income. Banks generally limit this ratio to 30–40%. A lower ratio means lower risk.

When a borrower fails to make mortgage payments. The bank may initiate collection proceedings and foreclose on the property. It is important to contact the bank early if difficulties arise.

An additional mortgage on a property already subject to a mortgage. Its lien ranks behind the first bank's claim. Interest rates are higher because the lender faces greater risk.

An arrangement in which a bank finances and supervises a developer's project, protecting buyers' money if the developer encounters difficulties. Protection takes the form of a bank guarantee or registered cautionary notice.

An official land registry document listing all registered rights in a property, including ownership, mortgages, attachments and cautionary notices. Essential for any property transaction.

A Mizrahi-Tefahot track offering a fixed interest rate for the entire loan term without indexation. It provides certainty about the monthly payment and suits borrowers seeking maximum predictability.

Costs beyond the property price, including purchase tax, legal and agent fees, valuation, insurance, registration and mortgage setup fees. They can reach 5–8% of the property's price.