| Loan Type | Pros | Cons |
| Fixed rate, Shekel-denominated, CPI-linked | - When interest rates are low, a low rate can be locked in for the long term.
| - The outstanding balance of the loan is adjusted by the inflation rate.
- Even if salary increase is above the inflation rate in the long term, in the short term, salaries may lag behind the inflation rate.
- Prepayment penalties.
|
| Floating rate, Shekel-denominated, $ or £ linked | - Good for those whose salaries are $ or £ linked or denominated.
- Loan can always be refinanced if NIS/$ rate deteriorates or if floating interest rates rise.
- No prepayment penalties.
| - Interest rate shocks.
- NIS/$ typically adjusts when inflation is rising and fixed rates are going up leaving limited refinancing options.
|
| Floating rate, Shekel-denominated, non-linked | - Even in hyper-inflationary environments, the balance is not adjusted.
- No prepayment penalties.
| - Interest rate shocks.
- When inflation is high, the Israeli Prime Rate typically rises as well.
|
| Hybrid | - A very low fixed rate can be locked in for the period before the reset date.
- No prepayment penalties at the reset date.
- Excellent for those borrowers who can time a reset date to coincide with an expected salary bonus/maturing of keren hishtalmut.
| - Interest rate shocks if no good refinancing option is available.
|