Knowledge Center for Mortgage Planning

This site is designed to consolidate all the information you need to take out the right mortgage for you. But before taking out a mortgage and before purchasing a home, let's go back to first principles. What does the process actually look like? What should you take into account? What "surprises" are we going to encounter? Is it even the right decision for us to buy this property?

Before diving into all the loan types, you need to be familiar with a few basic but important concepts from the world of macroeconomics. We're talking about inflation, the prime rate, and the Bank of Israel interest rate. If until now you've changed the channel whenever the news covered inflation expectations or the Bank of Israel's interest rate decision, you must understand them now. Your monthly payment will depend on them.

In this unit we will learn the terms and concepts that define a mortgage. We will get to know the features and mortgage products available in Israel, learn about the different loan types, understand what market spread means, tell the difference between linear payments and an annuity amortization schedule, learn the various methods for controlling your monthly payment, and more.

In unit three we learned that most loans are linked to an external economic variable — meaning that when that parameter changes, so does our monthly payment. We are planning a mortgage for decades ahead, and it is wise to make assumptions about these variables as part of a risk-management and hedging process.

We dedicate this chapter to a particularly important topic — the way our impulses, needs, desires, and human weaknesses shape our economic and financial behavior. Irrational behavior is the source of the biggest mistakes in mortgage planning. On the one hand, these biases are hard to recognize; on the other, they heavily influence how the mortgage mixture is planned — and so they cause serious damage that is very hard to fix later on.

Now it is time to return to the basics — to the world of financing. Our goal in this unit is to dispel common myths in mortgage financing — myths that can cost you a great deal of money!

Mortgage planning is also the art of negotiation — how to manage the budget in the years ahead, how to account for a growing family, how to properly leverage other financing sources, how to know which points to insist on, and how to spot an offer that is worse than expected. There is a lot to learn, so we created this section — case studies. Each case describes a different client we worked with. Unfortunately, there are many such stories. Hiring a professional, or following all the recommendations here, will help you avoid these mistakes.

After reading everything — how do you actually translate it all into a mortgage plan?