Mortgage Terms Made Simple
Without the Headache

The full glossary

Every mortgage term you may encounter along the way, arranged alphabetically and explained in clear, everyday language.

Loan-to-Value (LTV) · Financing rate

The percentage of a property’s value that is financed by the bank. To calculate the LTV ratio, divide the mortgage amount by the value of the property used as collateral. Under Bank of Israel regulations, the maximum permitted LTV depends on the type of purchase. Up to 75% for buyers purchasing their only home, Up to 70% for move-up buyers who are selling their existing home, Up to 50% for buyers purchasing an additional property, including an investment property.

Israel Land Authority land ("Minhal" land)

"Minhal land" is the commonly used name for land managed by the Israel Land Authority (ILA), formerly known as the Israel Land Administration. In many cases, the land itself remains publicly owned, while the property owner holds long-term lease rights (Chakhira). The ILA manages these rights and handles relevant approvals and lease-related payments. For certain properties that have not yet been registered with the Land Registry, the ILA may also issue a commitment to register a mortgage. Lease periods vary depending on the agreement. Common arrangements include a 49-year lease with an option to renew for another 49 years, or a 98-year lease.

Pooling Eligibility Benefits · Eligibility loans

Pooling eligibility benefits allows two or more people who each hold a valid eligibility certificate to combine their government-assisted loan amounts when purchasing a home together. This may apply to certain eligible buyers, including new immigrants and other holders of Ministry of Construction and Housing eligibility certificates, subject to the applicable program rules. An eligibility loan is linked to the Consumer Price Index. Its interest rate is set at 0.5 percentage points below the average rate on CPI-linked mortgages published by the Bank of Israel, or 3%-whichever is lower. Eligibility loans are also exempt from early-repayment fees. Because market mortgage rates may sometimes be more attractive, it is important to compare the eligibility-loan terms with the alternatives offered by the banks before deciding whether to include it in your mortgage.

Inflation · Consumer Price Index (CPI)

Inflation is a general increase in the prices of goods and services over time, which reduces the purchasing power of money. In Israel, inflation is commonly measured using the Consumer Price Index. The CPI tracks changes in the cost of a representative basket of goods and services purchased by households, including food, transportation, clothing, healthcare, and housing-related expenses. It is published monthly by the Central Bureau of Statistics, usually on the 15th of the month. Some mortgage options are linked to the CPI. When the index rises, the outstanding principal is adjusted accordingly, which can also increase the monthly payment and the total amount repaid.

Authorization of Rights

An authorization of rights is an official document showing the legal status of the rights in a property. It includes a description of the property, the registered rights holders, the nature of their rights, and any mortgages, liens, registered transactions, or other relevant notes. The document required depends on how the property is registered. For a property managed by the Israel Land Authority, an authorization of rights can be obtained from the ILA. If the property is registered with the Land Registry-commonly known as the "Tabu" - a Land Registry Extract must be obtained instead. A Land Registry Extract is generally located using the property’s block and parcel numbers, and for an apartment also a sub-parcel number. If an apartment has not yet been registered as a separate sub-parcel, the available registration may relate to the entire parcel or building rather than specifically identifying the individual apartment.

Mortgage Pre-approval · Approval in principle

A mortgage pre-approval, officially known as an approval in principle, is a document in which a bank states that it is prepared, in principle, to provide the requested mortgage based on the information supplied by the applicant. The document sets out the proposed mortgage amount, interest rates, loan structure, monthly payment estimates, and other key terms. After the approval is issued, the borrower must provide the documents required by the bank to verify the information in the application. These may include payslips, bank statements, identification documents, details of existing loans, property documents, and additional paperwork depending on whether the mortgage is for a purchase or refinancing. An approval in principle is conditional and does not constitute final approval of the mortgage. The bank may still need to verify the borrower’s financial information, assess the property, and approve the collateral. The approval is generally valid for up to 90 days from the date of issue.

Collateral · Security

Collateral is an asset pledged to a lender to secure repayment of a loan. In a mortgage, the property being financed usually serves as collateral, and the bank registers a mortgage or other security interest over it. Banks generally require property insurance for the mortgaged property. The property remains in the borrower’s ownership and possession; it is not held by the bank. If the borrower fails to make the required payments, the bank may begin legal enforcement proceedings. The property may then be sold, often through a court-appointed or Execution Office-appointed receiver. The sale proceeds are used to cover the outstanding mortgage debt, enforcement expenses, and any other legally applicable claims. Any surplus remaining afterward belongs to the property owner.

Mortgage life insurance

Mortgage life insurance is a life insurance policy taken out in connection with a mortgage. Israeli banks generally require borrowers to maintain this coverage. The bank is named as the irrevocable beneficiary, and the insured amount is limited to the outstanding mortgage balance. If an insured borrower dies during the policy term, the insurer pays the covered outstanding balance to the bank, subject to the policy’s terms. The premium depends on factors such as the borrower’s age, health, smoking status, mortgage amount, and repayment period. It generally decreases over time as the outstanding mortgage balance falls.

Property insurance · Home structure insurance

Property structure insurance covers the physical structure of a home and fixtures permanently attached to it. Banks commonly require borrowers to maintain this insurance for a property used as mortgage collateral, with the bank named as the irrevocable beneficiary. It is therefore generally a condition imposed by the bank. The policy provides cover for physical damage caused by specified events, which may include fire, water or plumbing damage, flooding, earthquakes, and other risks. The insured amount generally reflects the cost of rebuilding the structure rather than the property’s full market value, since the value of the land is not insured. Borrowers may purchase the policy from any insurer that meets the bank’s requirements and are not required to purchase it through the bank’s insurance agency.

Mortgage Discharge · Release of Security

A mortgage is discharged when the mortgage loan has been repaid in full and the bank’s registered security over the property is formally removed. The bank provides or submits the documents required to cancel the registration. The process depends on where the property and security are recorded-such as the Land Registry, commonly known as the Tabu, the Israel Land Authority, a registering housing company, or, where applicable, the Registrar of Pledges. Once the registration has been cancelled, the bank no longer holds that mortgage or pledge over the property.

Mortgage Drawdown · Loan Disbursement

Mortgage drawdown is the stage at which the bank releases the approved mortgage funds after all of its conditions have been met. Before the funds are released, the borrower must usually sign the mortgage documents and provide the required supporting documents. Depending on the property and transaction, the bank may require: A valuation by an appraiser approved by the bank / Registration of a mortgage, pledge, caveat, or commitment to register a mortgage with the appropriate authority / Mortgage life insurance and building insurance / Documents relating to the purchase, the sellers, the borrower’s finances, and the property’s legal registration. Once all the requirements have been completed and approved, the bank disburses the mortgage funds, either in a single payment or in several instalments according to the transaction’s payment schedule.

Bank of Israel · Governor of the Bank of Israel

The Bank of Israel is the country’s central bank. It conducts monetary policy, regulates and supervises the banking system-including banks’ mortgage activities-manages Israel’s foreign-exchange reserves, issues currency, oversees payment systems, and serves as the government’s banker. The Governor heads the Bank of Israel and chairs the Monetary Committee. The Committee determines the Bank of Israel interest rate based on factors such as inflation, economic activity, and financial stability. Interest-rate decisions are announced on dates published in advance, generally eight times a year. Through its Banking Supervision Department, the Bank of Israel supervises the stability and proper conduct of banks and promotes fair relations between banks and their customers.

Block & parcel · Sub-parcel (gush, helka, tat-helka)

A block, parcel, and sub-parcel are the official cadastral identifiers used to identify registered real estate in Israel. A block (gush) is a defined cadastral area containing a number of parcels. A parcel (helka) is a specific plot of land within that block and may contain one or more buildings. When a building is registered as a condominium, each apartment or other separately registered unit is assigned a sub-parcel (tat-helka) number. These identifiers are used to locate the property’s Land Registry record and obtain a Land Registry Extract, commonly known as a Tabu extract. A block and parcel number are required, and a sub-parcel number is also needed for an apartment registered as part of a condominium. The numbers may be located through official mapping services, municipal records, or the property’s purchase agreement. Land Registry information is generally publicly accessible. Anyone who has the relevant property identifiers can order an extract showing the registered owners or rights holders, mortgages, liens, caveats, and other registered information.

Full grace period · Partial grace period

A grace period is a temporary period during which some or all mortgage repayments are deferred. During a partial grace period, repayment of the principal is postponed, while the borrower continues to pay the interest. During a full grace period, both principal and interest payments are postponed. Once the grace period ends, the mortgage is repaid according to its regular amortization schedule. A grace period can temporarily reduce the monthly financial burden - for example, while buyers are still paying rent or waiting to move into their new home. However, the deferred payments are not cancelled. With full grace, interest generally continues to accumulate, which may increase both the later monthly payments and the total cost of the mortgage. The availability and terms of a grace period depend on the bank, the mortgage component, and the applicable loan program. Government-assisted loans and grants are subject to their own program-specific rules.

Mortgage Porting · Transfer of mortgage

Mortgage porting is the process of transferring the bank’s security from the borrower’s existing property to a replacement property, while keeping the existing mortgage in place. The old property is released from the bank’s security, and the new property is pledged instead. The process is similar to applying for a new mortgage. The bank reviews the borrowers, the sale and purchase agreements, the registration status of both properties, and the value and suitability of the replacement property. An updated appraisal and additional security documents may also be required. Under Bank of Israel rules, a bank should not refuse a request to transfer a mortgage or change the existing loan terms without an acceptable reason. It may refuse, however, when the replacement property does not provide sufficient collateral for the outstanding loan or when another valid lending restriction applies. Before porting a mortgage, it is worth comparing the existing terms with current refinancing options. Porting may be attractive when the existing mortgage terms are favorable, but refinancing may provide a structure that better suits the borrowers’ present circumstances.

Mortgage Payoff Statement · Payoff Balance

A mortgage payoff statement shows the amount required to repay a mortgage in full as of a specified date. It breaks down the outstanding balance for each mortgage component, including principal, accrued interest, indexation, and any applicable early-repayment fees. The statement may also include the original loan amount, loan and repayment type, drawdown and payment dates, interest-rate structure, indexation method, frequency and next date of rate changes, remaining term, current monthly payment, and figures intended to help borrowers assess whether refinancing may be worthwhile. Banks must make current loan information available through their online or mobile services. Customers who do not receive this information through the bank’s mobile app may request it in writing free of charge up to twice per calendar year. A payoff statement is an important starting point when evaluating early repayment or mortgage refinancing, because it shows both the outstanding debt and the costs involved in closing the existing mortgage.

Pledge Registration · Registration Fee

A pledge is a security interest registered in favor of a lender. In a mortgage transaction, the bank may require a pledge over the borrower’s rights in the property, particularly when those rights have not yet been registered at the Land Registry. When the property rights are already registered at the Land Registry, the mortgage itself is generally registered there instead. The pledge is registered with the Registrar of Pledges, which operates under the Israel Corporations Authority at the Ministry of Justice. Applications can be submitted online, and the applicable registration fee is paid to the Ministry of Justice. The registration fee depends on the requested registration period. As of 2026, the fees range from ₪45 for one year to ₪225 for five years or more. An online pledge report costs ₪12, while an inspection conducted at an office costs ₪38. These fees are reviewed and updated periodically.

Deflation · Negative inflation

Deflation is a sustained, broad-based decline in the general price level of goods and services. It is the opposite of inflation, which describes a general rise in prices over time. During deflation, the purchasing power of money increases, meaning that the same amount of money can buy more goods and services. Deflation may result from weak demand, excess supply, falling production costs, or a broader economic slowdown. Prolonged deflation may also be associated with reduced economic activity and rising unemployment. In Israel, changes in the general price level are measured primarily through the Consumer Price Index, published by the Central Bureau of Statistics. The CPI measures changes in the cost of a representative basket of household goods and services and is generally published on the 15th of each month for the preceding month. A decline in the CPI during a single month may be described as negative monthly inflation, but it does not necessarily indicate deflation. Deflation usually refers to a broader and more persistent downward trend in prices.

Gross income

Gross income is the total amount earned before taxes and other deductions are taken from it. For employees, it generally includes salary, overtime, bonuses, commissions, and other taxable payments shown on the pay-slip. Income tax, National Insurance contributions, health insurance contributions, and certain employee benefits are calculated using the applicable portions of gross income. Pension contributions may be calculated from the employee’s pensionable salary, which is not always identical to the full gross amount. After taxes, pension contributions, and other deductions are subtracted, the remaining amount is known as net income.

Net income

Net income is the amount remaining after taxes and other deductions have been taken from gross income. These deductions may include income tax, National Insurance and health insurance contributions, pension contributions, union or employee-committee dues, and other payroll deductions. For employees, net income generally refers to the amount actually transferred to the employee’s bank account. Reimbursements and allowances, such as travel expenses, may also affect the final amount paid, depending on how they are treated on the pay-slip.

Balloon loan · Bullet loan

A balloon loan is a loan in which the outstanding principal is repaid in one large payment at the end of the loan term rather than gradually through regular principal repayments. There are two main types: Partial balloon: The borrower pays interest during the loan term and repays the entire principal at the end. Full balloon: No regular principal or interest payments are made during the term. The principal and accumulated interest are repaid together at the end. The Bank of Israel defines a balloon or bullet loan as one in which the full loan balance is repaid at the end of the term, whether the interest is paid during the loan period or deferred until maturity. A balloon loan usually has much lower payments during the loan term, but leaves the borrower with a substantial final payment. In a full balloon loan, accumulated interest may also increase the amount due at the end. If the loan is CPI-linked, the outstanding balance may also rise with the index, according to the loan terms. Balloon loans are generally used for relatively short-term financing. It is commonly used by move-up buyers who purchase a new home before receiving the proceeds from the sale of their existing property. The loan is then expected to be repaid when the existing property is sold. A balloon loan describes how the loan is repaid; it does not necessarily determine its interest-rate or indexation structure. The loan may have fixed or variable interest and may be indexed or unindexed, depending on the product offered by the lender. Mortgage tracks are defined separately according to their interest-rate and indexation arrangements.

Bridge loan

A bridge loan is short-term financing commonly used when purchasing a new home before receiving the proceeds from the sale of an existing one. It covers the temporary funding gap between the two transactions and is generally repaid when the existing property is sold. The bank may secure the loan against the existing property, the new property, or other acceptable collateral, depending on the transaction and the bank’s requirements. It is not always necessary to register security over both properties. A bridge loan may use different repayment structures: Interest-only: The borrower pays the interest during the loan term and repays the principal when the property is sold. Full balloon: Both principal and interest are deferred and repaid together at the end of the term. Regular repayments: In some cases, the bank may offer another short-term repayment structure. Bridge loans are intended for a limited period. Bank of Israel rules recognize bridge loans with an original repayment term of up to three years, although the actual term approved by the bank may be shorter.

Eligibility loan · Government-Assisted Mortgage

An eligibility loan is a government-assisted housing loan provided through participating mortgage banks to applicants who meet the criteria established by the Ministry of Construction and Housing. To apply, the borrower must obtain an eligibility certificate from the Ministry. The amount of assistance is determined according to government criteria. Depending on the applicant’s eligibility category, these may include factors such as years of marriage, number of children, number of siblings, disability, age, or new-immigrant status. Eligibility is generally intended for applicants who meet the Ministry’s definition of having no home, together with any additional requirements applicable to the relevant assistance program. The loan is Consumer Price Index-linked. Its interest rate is set at 0.5 percentage points below the average interest rate on CPI-linked mortgages published by the Bank of Israel, or 3%-whichever is lower.

Location-Based Housing Assistance · Conditional Housing Grant

Location-based housing assistance is government support offered to eligible homebuyers purchasing property in designated localities. Depending on the applicable program, the assistance may take the form of an additional government-assisted loan-sometimes called a location loan-or a conditional housing grant. Under certain Dira BeHana’a housing programs, eligible homebuyers may receive a conditional grant when purchasing a home in selected peripheral areas. The eligible locations, grant amount, and conditions are determined by the Ministry of Construction and Housing. The grant remains subject to the conditions that may include restrictions on selling or transferring the property. Under the current Dira BeHana’a rules, the property generally cannot be sold for five years from the date it is approved for occupancy or seven years from the date of the winning lottery-whichever occurs first-unless an exception is approved. Eligibility should be checked directly through the Ministry of Construction and Housing.

Assignment of a Sale Law Guarantee

When a buyer purchases a new home from a developer and uses a mortgage to finance the payments, the mortgage bank may require the buyer to assign the Sale Law guarantee in its favor. The assignment does not transfer ownership of the apartment or all of the buyer’s rights to the bank. Instead, it gives the mortgage bank rights under the guarantee as security for the funds it has provided. If the guarantee is lawfully called, the proceeds may be used to repay the relevant mortgage debt, subject to the assignment documents and the guarantee’s terms. A Sale Law guarantee protects payments made by a buyer to a developer in circumstances specified by law, such as when the developer cannot transfer ownership or deliver possession because of insolvency, liquidation, foreclosure, or another absolute impediment.

Development agreement

A development agreement is an agreement between the Israel Land Authority and a developer or other rights holder allocating land for construction, subject to specified conditions. The agreement generally sets out the permitted use of the land, the required construction, the development timetable, payments, and other obligations. During this period, the rights holder has contractual development rights but does not yet hold the full long-term lease rights that arise under a lease agreement. Once the development obligations have been completed and the conditions of the agreement have been met, the rights holder may apply to enter into a lease agreement with the Israel Land Authority.

Caveat

A caveat is an entry in the Land Registry indicating that a person has undertaken to carry out-or refrain from carrying out-a transaction involving a particular property. It alerts anyone reviewing the property’s registration that an existing commitment may affect the rights in that property. In a property purchase, a caveat is commonly registered in favor of the buyer after the sale agreement is signed and before ownership is formally transferred. It helps protect the buyer by preventing the registration of a conflicting transaction without the buyer’s consent or an appropriate legal order. A caveat may also be registered in favor of a mortgage bank to protect the bank’s commitment to receive security over the property. Once the borrower’s ownership rights are formally registered, the bank’s security is generally registered as a mortgage rather than remaining only as a caveat. A caveat does not itself transfer ownership or create full ownership rights. It records and protects an existing legal commitment relating to the property.

Indexation Adjustments · Principal Indexation

Indexation adjustments are changes made to the outstanding principal of a loan when it is linked to an index or foreign currency. They are separate from the interest charged on the loan. In a CPI-linked mortgage, the outstanding principal is adjusted according to changes in the Consumer Price Index. When the CPI rises, the principal balance increases, which may also increase the monthly payment and the total amount repaid. In a foreign-currency or foreign-currency-linked loan, the outstanding balance and repayments may change according to movements in the relevant exchange rate. Indexation applies to the unpaid balance for as long as the relevant mortgage component remains outstanding.

Indexation · Linked Principal

Indexation is a mechanism that adjusts the outstanding principal of a loan according to changes in a specified benchmark, such as the Consumer Price Index or a foreign-currency exchange rate. It is separate from the interest charged on the loan. In a CPI-linked mortgage, the principal is adjusted according to movements in the Consumer Price Index. When the CPI rises, the outstanding balance generally increases. When the CPI falls, the balance may decrease, subject to the specific terms of the loan. Interest is then calculated on the adjusted principal, so indexation can affect both the monthly payment and the total amount repaid. In a foreign-currency or foreign-currency-linked mortgage, the shekel value of the outstanding balance and repayments changes according to movements in the relevant exchange rate. The Consumer Price Index is published by Israel’s Central Bureau of Statistics, usually on the 15th of each month.

Foreign-Currency-Linked Mortgage · FX-Linked Mortgage

A foreign-currency-linked mortgage is a loan whose outstanding balance is denominated in, or linked to, a foreign currency such as the US dollar or euro. The shekel value of the principal and monthly payments changes according to the exchange rate specified in the mortgage agreement. The borrower is therefore exposed to exchange-rate risk throughout the loan term. The interest rate may also be variable. It is generally calculated using a reference rate for the relevant currency together with a margin set by the bank. The frequency of interest-rate changes-such as every three or six months-is determined by the particular mortgage agreement. Foreign-currency mortgages may therefore be affected by two separate factors: changes in the exchange rate and changes in the applicable interest rate. LIBOR was historically used as the reference rate but permanently ceased by October 2024. Current and transitioned loans use alternative reference rates according to the currency and the terms of the agreement. Unlike a CPI-linked mortgage, a FX-linked mortgage is adjusted according to movements in the relevant foreign-exchange rate.

CPI Indexation · Consumer Price Index

CPI indexation means that the outstanding principal of a loan is adjusted according to changes in the Consumer Price Index. The interest rate may be fixed or variable, but indexation applies separately to the principal. The Consumer Price Index measures changes in the cost of a representative basket of goods and services purchased by households. It includes categories such as food, clothing, transportation, healthcare, and housing services. The index is published by Israel’s Central Bureau of Statistics, generally on the 15th of each month. When the CPI rises, the outstanding principal of a CPI-linked mortgage increases accordingly. Interest is then calculated on the adjusted balance, which may increase both the monthly payment and the total amount repaid. If the CPI falls, the principal may decrease, subject to the base-index provisions and other terms of the mortgage agreement. In a fixed-rate, CPI-linked mortgage, the interest rate remains fixed throughout the agreed period, while the principal continues to change according to movements in the CPI. Israel’s current annual inflation target range is 1%–3%.

Mortgage Registration Commitment Letter

Depending on how the property rights are recorded, the commitment may be issued or signed by the Israel Land Authority, a registering housing company, a developer, the registered property owner, or the seller. For properties managed directly by the Israel Land Authority that are not registered with the Land Registry or a registering company, the ILA issues the commitment itself. It undertakes not to register the borrower’s rights unless the bank’s mortgage is registered at the same time, and not to approve a transfer of the property rights without the lender’s consent. In a property purchase, the seller or developer may also be required to sign the bank’s commitment documents. A caveat may then be registered in favor of the bank until the borrower’s ownership rights and the bank’s mortgage can be formally registered. The commitment does not itself register the mortgage. It creates an obligation to ensure that the mortgage is registered when permanent registration becomes possible and restricts conflicting transactions in the meantime. The exact documents and registration process depend on whether the property is recorded with the Land Registry, the Israel Land Authority, or a registering housing company.

Attorney’s Undertaking to Register a Mortgage

An attorney’s undertaking to register a mortgage is a written commitment given to the lending bank when the mortgage cannot be formally registered immediately. The undertaking is generally signed by the attorney responsible for registering or transferring the property rights. It confirms that, once the buyer’s ownership or lease rights can be registered, the attorney will also arrange for the bank’s mortgage to be registered against those rights. Until permanent registration is completed, the bank may require additional security. The undertaking may be relevant when the property has not yet been registered as a separate unit, when parcelization or condominium registration has not been completed, or when the rights are still managed by the Israel Land Authority or a registering housing company. Properties in Judea and Samaria are registered through the applicable Civil Administration registry procedures.

Registering housing company (chevra meshakenet)

A registering housing company is a developer, contractor, or other authorized body that maintains records of property rights until the apartments are formally registered with the Land Registry, commonly known as the Tabu. During this interim period, the company records matters such as purchases, transfers of rights, mortgages, pledges, and other restrictions relating to the property. It may also issue an official authorization of rights showing the current rights holders and any security interests recorded against the property. Where a property is managed by a registering housing company, an Israel Land Authority information notice does not replace the legally binding authorization issued by that company. When a buyer takes out a mortgage, the registering company may provide the bank with a mortgage registration commitment letter. This confirms that the company will record the bank’s security in its records and arrange for the mortgage to be formally registered when permanent registration becomes possible. Permanent registration generally involves three stages: registering the land division, registering the building as a condominium, and registering each apartment as a separate sub-parcel in the name of its rights holder. Once these processes have been completed, the buyers’ rights and the bank’s mortgage can be transferred from the company’s records to the Land Registry.

Leasehold · Long-Term Lease Rights

A leasehold is a legal right to possess and use land for a specified period without owning the land itself. In Israel, many homes are built on publicly owned land managed by the Israel Land Authority, while the homeowner holds long-term lease rights under an agreement with the Authority. Lease agreements commonly run for 49 years, often with an option to renew for an additional period. Other lease periods may also apply, depending on the property and the specific agreement. A leasehold is a proprietary right and may be registered with the Land Registry. Where permanent Land Registry registration has not yet been completed, the rights may instead be recorded with the Israel Land Authority or a registering housing company. Lease payments and other charges depend on the terms of the agreement. Leasehold rights may generally be transferred to another person, subject to the lease agreement and any required approval from the Israel Land Authority. It is also possible to grant a sublease. It gives another person the right to use the property for a period while the original leaseholder retains their underlying leasehold rights.

Restricted account · Account restriction

A restricted account is a bank account on which cheques have been returned for insufficient funds within a twelve-month period. An ordinary account restriction lasts for one year. During this period, cheques may not be drawn on the restricted account, and the bank will not honor cheques presented against it. Information about the restriction is reported to the Bank of Israel and appears in the Credit Data System. It may remain visible in the customer’s credit report for three years after the restriction ends. Restrictions may affect banks' assessment of future credit or mortgage applications. A previous account restriction does not automatically prevent a customer from obtaining a mortgage. Each lender considers the applicant’s current financial position, repayment capacity, credit history, and overall risk.

Tabu · Land Registry Office

The Tabu is Israel’s Land Registry, operated by the Ministry of Justice. It maintains the official statutory records of registered rights in land, including ownership, leasehold rights, mortgages, caveats, liens, attachments, and other entries affecting a property. Registered properties are identified by a block (gush) and parcel (helka) number. When an apartment or another unit is separately registered as part of a condominium, it also has a sub-parcel (tat-helka) number. A Land Registry Extract, commonly known as a Tabu extract, provides the property’s current registration details. It may show the registered rights holders, the nature of their rights, mortgages, caveats, attachments, and other registered restrictions. Any person can order an extract online for a fee using the relevant property identifiers. The relevant bureau is determined by the location in which the property is registered.

Notarised power of attorney

A notarised power of attorney is a document authorising the mortgage bank, or representatives acting on its behalf, to perform specified legal and registration-related actions connected with the mortgage. The borrowers sign the document before a licensed notary, who verifies their identity and authenticates their signatures. In Israel, a notary must be a member of the Israel Bar Association, have at least ten years of legal experience, complete the required training, and satisfy the applicable professional and suitability requirements. The power of attorney may allow the bank to submit documents, register a mortgage or other security, register or cancel relevant entries, correct registration details, and complete actions needed to protect its rights in the property. Powers of attorney are also recognized as supporting documents in Land Registry registration procedures.

Equal-principal schedule · Amortisation schedule

Under an equal-principal repayment schedule, the same base amount of principal is repaid in each instalment. Interest is calculated on the outstanding balance, so the interest portion generally decreases as the principal is repaid. The first monthly payments are usually higher than under a Spitzer schedule. However, because the principal is reduced more quickly, the payments generally decline over time and the total interest paid is usually lower-assuming the loan amount, interest rate, and repayment period are otherwise identical. In a CPI-linked or variable-rate mortgage component, the actual payment may not decrease consistently. Indexation or an increase in the interest rate may raise the outstanding balance or monthly payment despite the equal-principal structure.

Stamp duty · Mortgage stamping

Stamp duty was a government tax formerly imposed on certain legal and financial documents in Israel, including mortgage and loan agreements, under the Stamp Duty on Documents Law, 5721–1961. The amount payable depended on the type and value of the document. A document subject to the tax had to be officially stamped as evidence that the required duty had been paid. The charge was abolished for documents signed from 1 January 2006, and stamp duty is therefore no longer payable when taking out a mortgage in Israel.

Real Estate Capital Gains Tax (mas shevach)

Real estate capital gains tax is imposed on the taxable gain arising from the sale of a right in Israeli real estate. It is generally payable by the seller. The taxable gain is not simply the difference between the purchase price and the sale price. The calculation may consider permitted expenses, such as certain acquisition costs, legal fees, brokerage fees, improvement expenses, and other deductible amounts, together with the applicable indexation and tax rules. The seller must report the transaction to the Israel Tax Authority and submit a self-assessment or claim an applicable exemption, generally within 30 days of the transaction date. Exemptions, partial exemptions, reduced calculations, or other relief may be available depending on factors such as the type of property, the seller’s circumstances, the date of acquisition, and the nature of the transaction. If the calculation results in no taxable gain, no capital gains tax is payable. A loss does not normally generate a direct tax refund.

Conditional Grant · Standing loan

A standing loan is a form of government housing assistance provided as a conditional grant. The borrower generally makes no regular repayments while complying with the conditions of the assistance program. If all the conditions are met for the required period, some or all the loan becomes a grant and does not need to be repaid. If the conditions are breached, for example, if the property is sold or the borrower stops living in it before the required period ends, the amount may become repayable in accordance with the program’s terms. Israel’s Housing Loans Law defines a standing loan as part of a housing loan that either becomes a grant or becomes due for repayment when the specified conditions are met. The eligibility requirements, holding period, interest, indexation, and repayment conditions vary between government assistance programs.

Land Registry extract (nesach Tabu) · Tabu Extract

A Land Registry Extract, commonly known as a Tabu extract or nesach Tabu, is an official document showing the legal information recorded for a registered property as of the date it is issued. The extract may include the registered owners or other rights holders, the type and extent of their rights, Mortgages, caveats, liens, attachments, court orders, and other restrictions, and the property’s official block, parcel, and, where applicable, sub-parcel numbers. Anyone can order a Land Registry Extract online for a fee. To locate the correct record, the property’s block and parcel numbers are required. For an apartment registered as part of a condominium, the sub-parcel number is also generally needed. The information is accurate only as of the date the extract is generated. A Land Registry Extract is relevant only when the property is formally registered with the Land Registry. If the rights are recorded with the Israel Land Authority or a registering housing company, an authorization of rights may be required instead.

Sale Law guarantee

A Sale Law guarantee protects payments made by a buyer purchasing a new home from a developer. It is one of the forms of security recognized under Israel’s Sale (Apartments) (Assurance of Investments of Homebuyers) Law. A developer may not collect more than 7% of the purchase price unless the buyer’s payments are protected through one of the safeguards permitted by law. These may include a bank guarantee, an insurance policy, a qualifying first-ranking mortgage, a caveat that meets the statutory conditions, or the transfer of ownership or another right in the property. A bank guarantee is intended to secure the repayment of the buyer’s protected funds in circumstances defined by law - for example, when an absolute impediment prevents the developer from transferring the rights or delivering possession because of insolvency, liquidation, foreclosure, or similar circumstances. Canceling the purchase agreement alone does not automatically entitle the buyer to call the guarantee. In a project with bank financing, payments are generally made through a designated voucher system into the project’s financing account. The accompanying bank or insurer must issue the applicable security for the payment within the period prescribed by law. The security remains in place until the statutory conditions for its release have been met, which may include completion of construction, delivery of possession, and the registration or protection of the buyer’s rights. Buyers should verify that each payment is made through the correct channel and is covered by the required security.

Early repayment fee · Early Repayment Fee

An early repayment fee may apply when a borrower repays all or part of a mortgage before the scheduled end of the loan term, including when refinancing the mortgage. It is not one automatic charge: the amount and components depend on the mortgage option, interest structure, timing of repayment, and notice given to the bank. The possible charges include an operational fee; a notice fee equal to 0.1% of the amount repaid if fewer than ten days’ notice is given; and, in some cases, an interest-rate differential fee, also known as a capitalization fee. The capitalization fee may apply when the relevant average mortgage rate published by the Bank of Israel is lower than the rate used for the existing loan. It is calculated using the remaining payments and period until the loan’s final repayment or next interest-rate adjustment. For certain variable-rate mortgage components, no capitalization fee is charged - for example, when the interest rate changes at least once a year. If repayment is made on an interest-rate adjustment date, generally only the operational fee may be charged. Additional charges may apply in specific cases. A CPI-linked component repaid between the 1st and 15th of the month may be subject to an average-index fee. A foreign-currency loan may be subject to an exchange-rate differential fee if insufficient advance notice is given. The capitalization fee may be reduced according to the time that has passed since the loan was granted and the type of loan. Ordinary bank-funded loans receive a 20% reduction after three years and a 30% reduction after five years, while different reductions apply to supplementary loans granted to eligible borrowers.

Mortgage Application Fee · File-Opening Fee

The mortgage application fee is charged by a bank for processing a housing-loan application and preparing the mortgage for drawdown. It covers administrative work such as reviewing documents, handling the required security, and completing the bank’s loan procedures. For mortgages issued by Israeli banks, the fee is currently capped at ₪360, regardless of the size of the mortgage. A bank may charge less or waive the fee. The fee is separate from other mortgage-related expenses, such as an appraisal, notarial services, insurance, and registration fees.

Early repayment · Full or Partial Prepayment

Early repayment means repaying all or part of a mortgage before the scheduled end of the loan term. Refinancing an existing mortgage also involves early repayment, since the old loan is repaid using funds from a new loan. A full early repayment closes the mortgage entirely. A partial early repayment reduces the outstanding balance and may either lower the monthly payment or shorten the remaining loan term, depending on the arrangement selected. Early repayment may involve fees. Depending on the mortgage component and the timing of repayment, the bank may charge an administrative fee, a fee for giving fewer than ten days’ notice, and, in certain cases, an interest-rate differential fee-also known as a capitalization fee. The capitalization fee is intended to compensate the bank for a potential financial loss when the applicable average mortgage rate at the time of repayment is lower than the rate on the existing loan. It is calculated using the present value of the future payments being repaid early and the average interest rates published by the Bank of Israel. When only part of the mortgage is repaid, any applicable capitalization fee is calculated only in relation to the portion repaid early.

Pari passu · Equal-Ranking Security

Pari passu means “on equal footing.” In mortgage lending, it means that two or more lenders hold security over the same property at the same level of priority, rather than one lender ranking ahead of another. If the property is sold through enforcement, the lenders share the available proceeds according to the terms of the pari passu agreement-typically in proportion to their respective secured debts or agreed shares. They do not necessarily receive identical amounts. Bank of Israel rules likewise use pari passu to describe rights held at an equal level according to each lender’s share. If the sale proceeds are insufficient to repay all secured debts and enforcement costs, an outstanding debt may remain payable by the borrower, subject to the applicable legal process. Pari passu security may be used when a borrower takes financing from more than one lender or refinances only part of an existing mortgage with another bank. In such cases, the existing and new lenders may agree to hold equal-ranking security over the property. Bank of Israel guidance specifically refers to pari passu arrangements where part of a housing loan is repaid using a loan from another bank. A temporary pari passu arrangement may sometimes be used during refinancing while both banks’ securities remain registered. However, it is not required in every refinancing transaction. In a full refinance, the new bank may instead transfer the payoff funds against the original bank’s undertaking to discharge its mortgage.

Parcellation · Subdivision of Land

Parcellation is the legal and cadastral process of dividing, consolidating, or rearranging plots of land to create new parcels that can be registered separately with the Land Registry. It translates the boundaries shown in an approved planning scheme into formally registered parcels. A plan prepared for registration is generally drawn up by a licensed surveyor, reviewed and approved by the Survey of Israel, and then submitted for registration with the Land Registry. Once registered, each new parcel receives its own official parcel number. Parcellation does not divide a building into individual apartments or sub-parcels. That occurs later through condominium registration, under which the building is registered as a condominium and each apartment or separately registered unit receives its own sub-parcel number.

Registrar of Pledges · Registration of a Pledge

The Registrar of Pledges is part of the Israeli Corporations Authority within the Ministry of Justice. It maintains the official register of notices relating to pledges created by individuals, partnerships, associations, and certain other entities. A pledge is a security interest granted to a lender over an asset or a person’s rights in an asset. In a mortgage transaction, a bank may require a pledge over the borrower’s contractual rights in a property-particularly when those rights have not yet been formally registered with the Land Registry. Once the property is registered in the borrower’s name, the bank’s security may instead be registered as a mortgage with the Land Registry. The register can be searched to determine whether pledges have been recorded against a particular debtor or asset. Pledges can be registered, amended, extended, inspected, and discharged. Registration can now be completed online by the parties or by an authorized lawyer. The applicable fees are updated periodically. The registration fee depends on the period for which the pledge is registered, ranging from ₪45 for one year to ₪225 for five years or more. An online pledge report costs ₪12, while an office inspection costs ₪38.

Interest · Interest rate

Interest is the price paid for borrowing money. In a mortgage, it is charged as a percentage of the outstanding principal and forms part of the borrower’s monthly payment. Mortgage interest rates are generally quoted as annual rates, although interest is calculated and charged according to the repayment schedule and the terms of the loan agreement. An interest rate may be Fixed (The rate remains unchanged for the agreed period) or Variable (The rate is updated periodically according to a specified benchmark, together with a margin set by the bank). Variable rates may be linked to benchmarks such as the prime rate, government-bond yields, or another reference rate specified in the mortgage agreement. Not every mortgage benchmark is set or supervised directly by the Bank of Israel. The Bank of Israel interest rate is determined by the Monetary Committee on dates published in advance, generally eight times a year. Changes in this rate affect the prime rate and may therefore affect mortgages with a prime-linked component. In a fixed-rate, unindexed mortgage, the interest rate does not change and the principal is not linked to the Consumer Price Index. Under a Spitzer repayment schedule, the scheduled principal-and-interest payment generally remains constant, although other mortgage-related costs, such as insurance, are separate. Under an equal-principal schedule, the payment decreases over time.

Effective interest rate · Adjusted Interest Rate

The effective interest rate is the annual rate that reflects the effect of compounding during the year. It shows the actual annual interest rate produced when interest is calculated periodically - for example, through monthly mortgage payments. The nominal interest rate is the annual rate stated in the loan documents. The effective, or adjusted, interest rate converts that nominal rate into an annual figure that accounts for the frequency of interest calculations. It will therefore generally be slightly higher than the nominal rate when interest is calculated monthly. The effective interest rate does not mean the interest actually paid if the mortgage is repaid early, and it does not automatically include early-repayment fees, future CPI indexation, exchange-rate changes, insurance, appraisal costs, legal fees, or registration expenses. It is useful when comparing interest rates calculated on the same basis, but borrowers should also consider the mortgage’s indexation, repayment structure, possible rate changes, fees, and total projected repayments.

Compound interest · Capitalized Interest

Compound interest arises when unpaid interest is added to the loan balance and future interest is then calculated on that increased balance. In other words, the borrower begins paying interest not only on the original principal, but also on previously accumulated interest. This may occur during a full grace period or a full balloon loan, when interest payments are deferred. The unpaid interest may be capitalized-added to the outstanding balance-in accordance with the loan agreement. Bank of Israel guidance distinguishes these arrangements from partial grace and ordinary balloon loans, in which interest may continue to be paid during the loan term. During a partial grace period or an interest-only balloon loan, the borrower generally pays the ongoing interest while principal repayment is postponed. In that case, interest does not ordinarily accumulate as unpaid interest, although the principal may still change because of CPI indexation or another linkage mechanism. Accrued interest means interest that has accumulated since the last payment or calculation date but has not yet been paid. It becomes compound interest only if it is added to the principal or loan balance and begins generating additional interest. If the mortgage is repaid early, interest is generally charged only up to the payoff date. Future interest for the remaining scheduled loan term is not payable, although early-repayment fees or other applicable charges may still apply. A Spitzer mortgage is not completely free of compounding. Mortgage rates are commonly expressed as annual nominal and effective rates, and the effective rate reflects the effect of periodic interest calculations on a loan repaid monthly. However, under a normal Spitzer schedule, the interest due each month is paid through the instalment rather than left unpaid and added to the balance.

Nominal interest rate · Stated Interest Rate

The nominal interest rate is the annual interest rate stated in the loan agreement. It is the contractual rate used to calculate the interest charged on the outstanding principal. For a mortgage calculated through monthly payments, the nominal annual rate is generally divided by 12 to determine the monthly interest rate. Because this calculation does not reflect the effect of compounding over the year, the corresponding effective annual rate is usually slightly higher. The nominal rate does not include CPI indexation, foreign-exchange movements, insurance premiums, registration costs, appraisal fees, legal expenses, or early-repayment fees. These may affect the mortgage’s total cost but are separate from the stated interest rate. The nominal interest rate may be fixed or variable. In a variable-rate mortgage, the stated rate is generally made up of a reference rate together with a margin set by the bank and may change on the adjustment dates specified in the loan agreement. The repayment schedule - such as Spitzer or equal principal - determines how each payment is divided between principal and interest. It does not change the meaning of the nominal interest rate.

Late-payment interest · Mortgage Arrears Interest

Late-payment interest is additional interest charged when a mortgage instalment is not paid by its due date. It generally accrues on the overdue amount from the payment date until the arrears are settled, in accordance with the mortgage agreement and the applicable legal limits. The rate is usually higher than the mortgage’s regular contractual interest rate. The maximum interest rate applicable to arrears on a mortgage secured by a residential property is published and updated periodically by the Accountant General. It may change when the underlying reference rates change. When a mortgage falls into arrears, the bank must notify the borrower and provide ways to contact it regarding repayment arrangements. The bank must provide reasonable advance notice before beginning proceedings to enforce the mortgage.

Property appraisal · Real-estate appraiser

A property appraisal is a professional assessment of a property’s value and condition. In a mortgage transaction, it helps the bank determine the value of the property being offered as collateral and assess the amount it is prepared to lend. The values appraised may differ from the purchase price stated in the sale agreement. The appraisal is carried out by a licensed real estate appraiser. In Israel, appraisers must meet the professional requirements of the Real Estate Appraisers Council, including completing an academic degree, passing the required examinations, completing an internship, and being registered in the Real Estate Appraisers Register.

Mortgage eligibility certificate · Government Housing Assistance Certificate

A mortgage eligibility certificate is an official document issued by the Ministry of Construction and Housing through a participating mortgage bank. It confirms whether the applicant qualifies for a government-assisted housing loan and sets out the type and amount of assistance available. The documents required depend on the applicant’s personal circumstances and eligibility category. They may include identification documents, proof of marital or family status, confirmation of military or national service, details of siblings, and additional supporting documents requested by the Ministry. The certificate generally remains valid for one year from the application date and may be renewed through a participating mortgage bank. The application currently costs ₪70, although fees and procedures may be updated.