מחשבון אנונה

In the world of finance, an "annuity" is a fixed monthly payment paid out of, or drawn from, accumulated savings - this is the formal meaning, and how finance professionals use the term.

In the mortgage world the name was borrowed for a similar product: a fixed monthly payment that is actually a loan, secured against a residential property - as part of a "reverse mortgage".

The pension idea: converting savings into a fixed monthly payment. For example, someone who has reached retirement age and has a savings plan or study fund of ₪1,000,000, but doesn't need the whole amount right now - only ₪7,000 in monthly income - leaves the money invested (the fund keeps earning interest) and withdraws ₪7,000 from it every month. This is an "annuity", and it exists at every insurance company and most investment houses.

In the mortgage world there are two main products: the "fixed monthly income top-up" at Mizrahi Tefahot bank, and the "annuity track" at the Ayalon insurance company. Instead of taking a large loan today and paying interest on all of it, a credit line is approved and received as a fixed monthly amount - with interest charged only on what is actually drawn.

The calculator suits several uses: fixed monthly income top-up (Mizrahi Tefahot), annuity track (Ayalon), a "classic" annuity against a savings plan, and also as a yield calculator.

Example - a balloon loan of ₪100,000 with a monthly annuity of ₪2,500:

• One-time amount - 100,000.
• Monthly annuity amount - 2,500.
• Nominal annual interest rate - The stated interest rate of the loan.
• Period - The period under review, in months.
• Average annual inflation - Optional - fill in if the loan is index-linked.

The result shows the debt including accrued interest, without linkage. If inflation is also filled in, an additional result is produced including linkage. Both results matter: the financing-percentage and repayment-ratio calculations are derived from the result without linkage - even when the loan is linked.

For a fixed monthly withdrawal from an existing savings plan - enter the "monthly annuity amount" as a negative number.

For example: a client has ₪1,000,000 in a savings plan with an annual yield of 4%, and wants to withdraw ₪2,500 a month. Enter: one-time amount 1,000,000; monthly annuity amount -2,500 (negative); interest - the nominal yield; period - the review period; inflation - only if the plan is index-linked. (Important: enter the nominal rate, not the effective one, as customary in the mortgage world.)

It can also be used to calculate the yield on a one-time investment and/or a fixed monthly deposit. For example: ₪100,000 today + ₪1,000 every month, at a nominal annual yield of 4.5%, over 120 months.

Two results are produced: for a deposit at the start of the period (Mizrahi Tefahot) and for a deposit at the end of the period (Ayalon). In both, the initial amount is deposited today; the difference is in the monthly deposit - whether it starts today already (start of period) or only from next month (end of period).

A product within a "pension mortgage", which allows creating a kind of "self-pension" secured against the property - with interest charged only on what is actually drawn, not on the entire credit line.

• Annuity period: Up to 20 years (then repaid in one lump sum, as with a balloon loan).
• Interest rate types: One loan structure to choose - fixed non-linked, fixed linked or prime (in practice almost always fixed linked or fixed non-linked).
• Repayment schedule: Full balloon (up to 20 years) - principal and interest in a single payment at the end; or full grace period (up to 15 years) followed by standard (Spitzer) payments for another 15 years.
• Financing rate: Up to 50% of the property value (up to 45% under standard authority), based on the debt level at the end of the grace/balloon period including accrued interest.
• Loan purpose: "Any purpose" only.
• Fees: ₪360 file-opening fee, plus early-repayment fees as with any mortgage (with a long balloon/grace period the discounting is "sharper" - it's recommended to take the realistic period actually needed).
• Flexibility: You can stop the annuity at any time - what's already been drawn continues as a balloon loan until the end of the period.

Example: Receiving ₪4,000 a month for 10 years, fixed-linked track at 5% interest, 2% inflation. Enter: one-time amount - empty (Mizrahi doesn't allow a balloon together with the annuity); monthly annuity 4,000; interest 5%; period 120; inflation 2%.
Without linkage: ₪623,717 - the amount used to calculate the financing percentage and repayment ratio (on a property worth ₪2M → about 31% financing).
Including linkage: ₪695,995 - the amount the client is expected to actually repay at the end of the period.