Early repayment fee calculator
The fee is mainly the capitalization fee: your remaining payments discounted at today's Bank of Israel average minus the same payments at the lower of your rate and the average at origination. It is cut 20% after 3 years and 30% after 5. Prime and Zakaut pay none.
The fee is set by the Bank of Israel's Banking Order on early repayment of a housing loan. It has four parts: the capitalization fee, an operational fee of up to ₪60, a no-notice fee of 0.1% of the amount repaid if you gave less than 10 days' notice, and, on CPI-linked loans repaid between the 1st and the 15th of the month, an average-CPI fee.
The capitalization fee compensates the bank when market rates have fallen. It discounts your remaining payments at the average mortgage rate the Bank of Israel publishes for your remaining term, and compares that with the same payments discounted at your own rate. If the average is higher than your rate, there is no fee. The bank charges the lower of two calculations, so the reference is the lower of your rate and the average at the time you took the loan.
The fee is reduced automatically as the loan ages: 20% after 3 years and 30% after 5 for an ordinary bank loan, and 10%, 20%, 30% and 40% after 1 to 4 years for a bank loan that supplements a Zakaut loan. No capitalization fee applies on Prime, on the Zakaut loan itself, or on a track that resets every few years if you repay on its reset date. Fixed tracks such as Kalatz and Katz pay it whenever the average is below your rate.
This is an estimate. The bank's exact figure uses the Bank of Israel average for your exact remaining term and the payoff date, so ask for a written payoff statement (doch yitrot lesiluk) before you decide.
Questions
- Which tracks have no early repayment fee?
- Prime and any track whose rate changes at least once a year pay no capitalization fee. The state Zakaut loan has no early repayment fee at all. A track that resets every few years pays only the operational fee if you repay on the reset date.
- How much do I save by waiting for the loan's 3-year or 5-year anniversary?
- On an ordinary bank loan the capitalization fee drops by 20% after 3 years and 30% after 5. A fee of ₪50,000 becomes ₪40,000 at the 3-year mark, so repaying a few days later can save thousands.
- How do I avoid the 0.1% no-notice fee?
- Give the bank at least 10 days' written notice and repay between day 11 and day 45 after the notice. Without it the bank charges 0.1% of the amount you repay.
- What is the average-CPI fee?
- On CPI-linked loans (such as Katz), repaying between the 1st and the 15th of the month adds a fee based on the average yearly index change. Repaying in the second half of the month avoids it.
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