Fixed Unlinked Loan (KALATZ)
The fixed unlinked loan, or KALATZ for short, is a loan where the monthly payment in the first month is identical to the payment in the last. It's the safest track from the borrower's perspective, because there are no surprises whatsoever.
Regulatory requirements
Under the supervision of the banking system, at least 33% of the total mortgage must be composed of KALATZ, KATZ, or government-subsidized mortgage (ZAKAOT) loans. For example: in a mortgage of one million NIS, at least 333,000 NIS must be in one of these tracks.
What affects the interest rate?
Two main factors affect the interest rate on a KALATZ loan:
- Loan duration — this is the factor with the greatest impact. The longer the loan, the higher the interest rate.
- Loan-to-value LTV — the less you borrow from the bank relative to the property value, the better the interest rates.
For up-to-date interest-rate figures, see the interest-rate statistics.
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Early prepayment fee
The KALATZ loan carries an early prepayment fee. The size of the fee depends on the difference between the current market interest rates and the interest rate on your loan. If market interest rates have fallen since you took out the loan, the fee will be higher.
Advantages
This is the only loan track that guarantees a fixed monthly payment for the entire loan term. If you're after complete certainty and don't want any surprises in your monthly payment, this is the loan for you.
Disadvantages
Because of the certainty it provides, this is also the most expensive loan track. Interest rates on KALATZ are the highest of all the tracks, and the monthly payment will be higher than on other loans for the same amount and term.
A common mistake
Many people think loading up on KALATZ is the way to build a safe mortgage mixture. But that's a mistake. When you take a lot of KALATZ, you're forced to compromise on the quality of the other loans in the mixture, which can actually raise your risk elsewhere.
The key is the right balance between safe loans and cheaper loan tracks, in line with your ability to absorb changes in the monthly payment.