When we approach taking a mortgage, the bank doesn't offer us a single loan, but rather a combination of several smaller loans, each called a "track". Each track has different characteristics: the type of interest (fixed or variable), indexation (to the Consumer Price Index or non-indexed), and exit stations (the option for early repayment without penalty).
As part of a professional mortgage consulting process, our goal is to build the "mix" – the precise combination between the different tracks – that will suit your financial profile. A proper mix balances risk and opportunity, between monthly payment stability and overall interest savings throughout the life of the loan.
Many mistakenly think that the lowest interest rate is the most important. This is a common mistake. A track with a low initial interest rate can be very dangerous if it's exposed to extreme changes in the index or Bank of Israel interest rate. Therefore, a deep understanding of the tracks is critical.
A review of the common mortgage tracks and what each means for your monthly payment
A track that is not indexed to the CPI, based on the Bank of Israel interest rate plus a fixed margin (1.5%). This is a track that was once very cheap, but today is directly affected by interest rate increases in the economy.
The most stable track. The interest rate is set in advance for the entire period and doesn't change, and the principal is not indexed to CPI. You know exactly how much you'll pay from the first day to the last.
The interest rate changes at "exit stations" (for example every 5 years) according to a specific anchor, and the principal is indexed to the Consumer Price Index. This track usually starts with a low interest rate.
A subsidized loan granted to eligible applicants according to state criteria. Usually involves a fixed interest rate linked to the index under preferential terms.
The interest rate is set in advance for the entire period and does not change, and the principal is linked to the index. This track usually starts with a low interest rate
The interest rate is set in advance for the entire period and does not change, and the principal is linked to the index. This track usually starts with a low interest rate
There is no single "mortgage mix" that suits everyone. A young couple purchasing their first apartment and needing maximum security will receive completely different recommendations than an experienced investor planning to sell the property within a few years.
When we provide mortgage consulting services for first-time buyers, we take into account parameters such as future repayment capacity, expected family growth, and study funds expected to be released. In contrast, when advising home upgraders, the emphasis may be on flexibility and future mortgage recycling.
The wisdom is to balance: combine a "fixed CPI-linked" track for stability, together with a "prime" track for flexibility, and perhaps a small portion in a variable track if early repayment is expected. This is the heart of proper financial planning.
Building a mortgage mix is the biggest financial decision you'll make. Let the experts at Ariel Achon help you build the secure path to your home.
