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Ailon's mortgage dictionary explains in clear language the terms you encounter before buying an apartment, while building the mix and throughout the life of the mortgage. Each definition stands on its own and is connected to the practical decision it affects.
They speak mortgage in Hebrew
Short and precise definitions that will help you understand bank offers, contracts and settlement schedules before making a decision.
A document from the bank showing, based on the data provided, the amount of the mortgage and the basic terms that the bank is willing to consider. The approval is not a final commitment and is conditional on the verification of documents, the inspection of the property and the bank's requirements.
The ratio between the amount of the mortgage and the value of the property that the bank recognizes for the purpose of the transaction. The Bank of Israel sets ceilings, but the bank may approve a lower rate according to the borrower and the property.
An asset or right used to secure the repayment of the loan. In a mortgage, the purchased property is usually pledged in favor of the bank.
A period in which the payment of the principal, and sometimes also part of the payment, is postponed. The postponement does not erase the debt and may increase the total cost.
A loan in which a significant part of the fund, and sometimes the entire amount, is paid at the end of the period. It requires a clear source of payment and is suitable only after checking flow and risks.
The money that the buyer brings from his own sources to the transaction, beyond the mortgage. It should also be saved for related expenses such as purchase tax, lawyer, appraisals, brokerage and renovation.
Net income that the bank recognizes after deducting fixed liabilities. It is used to examine the repayment ratio and the ability to meet the payment.
The ratio between the monthly repayment of the credit obligations and the disposable income. The higher the ratio, the smaller the household's margin of safety.
A settlement schedule where the basic payment is fixed when the interest rate and the index do not change. At the beginning of the period, a larger part of the payment is interest and later on the principal part increases.
A table where the principal component is fixed each month and the interest is calculated on the balance. The return starts high and gradually decreases, assuming there is no linkage or interest rate change.
A table showing for each month the payment, the principal component, the interest component and the expected balance throughout the life of the loan.
An index published by the Central Bureau of Statistics and reflecting changes in residential construction costs. In certain contractor contracts, part of the payments is attached to it in accordance with the law and the contract.
Exchange an existing mortgage with a new loan to change routes, period or repayment. Feasibility is assessed after repayment fees and switching costs.
A course with an interest rate that varies according to the prime interest rate. The prime interest rate in Israel is derived from the Bank of Israel interest plus a fixed bank margin.
A mortgage with a fixed interest rate that is not linked to the index. The payment is more predictable, but the initial interest may be higher than variable routes.
A loan where the fund balance is updated according to an agreed index. An index increase may increase the balance and the payment.
A general name for fees that may apply when paying off a mortgage before the due date. The key component may be the capitalization fee, depending on the route and interest rate differentials.
The calculated annual cost of the credit after taking into account the frequency of payments. It allows for a more accurate comparison than the nominal interest rate alone.
Professional valuation of the property. The bank uses it, among other things, to determine the value of the property for the financing percentage and to examine the collateral.
The division of the mortgage between interest tracks, linking and different periods. A good mix adjusted to the repayment capacity, the future plans and the risks of the borrower.
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