Fixed Non-Linked Interest Rate 2026 – Advantages and Disadvantages

The fixed non-linked interest rate option is the choice for those who want to know exactly how much they will pay each month throughout the life of the loan — without surprises. Here’s what is important to understand before choosing it.

How It Works

The interest rate is set once at the time of taking the loan and remains completely fixed until the end of the term — without linkage to the consumer price index and without dependence on future interest rate decisions by the Bank of Israel. In 2026, the interest rate for this option ranges around 3.8%-4.3%, depending on the bank and the borrower's profile.

The Main Advantage: Absolute Certainty

The monthly repayment is the same in the first month and the last month of the loan — it’s easy to plan a long-term family budget without fear of rising interest rates or inflation that would increase the principal.

The Disadvantage: Price for Certainty, and High Exit Costs

The fixed interest rate is usually slightly higher than the average rate in other options at the time of signing — this is the "price" of certainty. Additionally, if market interest rates drop after you take the loan (as happened in 2026 with three consecutive cuts), early repayment of this option incurs a significant prepayment penalty — sometimes thousands to tens of thousands of shekels, depending on the interest rate gap and the remaining amount.

Example Calculation

On ₪900,000 for 30 years at a fixed interest rate of 3.9%: the monthly repayment is about ₪4,245 — completely fixed, even if the Bank of Israel's interest rate rises or falls in the future.

Who Is It Most Suitable For?

For those who hate surprises and want to plan a long-term budget with complete confidence.
For those who borrowed a relatively large amount compared to their income and cannot absorb an increase in repayment if interest rates rise.
Less suitable for those who expect to refinance or repay early in the near future — due to the prepayment penalty.

A Common Mistake to Avoid

A common mistake is to put the entire mortgage amount in a fixed option just because "it’s the safest" — this completely forfeits the opportunity to benefit from future interest rate drops and exposes you to a high prepayment penalty if you do want to change direction later. It is recommended to limit the fixed portion to part of the mix, not all of it.

Details on the Prepayment Penalty

The prepayment penalty is calculated based on the difference between the interest rate you received and the current average market rate, multiplied by the remaining loan balance and the time left. The larger the gap and the longer the time remaining, the higher the penalty will be — therefore, it is important to check it with the bank before any decision on early repayment or refinancing.

Frequently Asked Questions

What happens if market interest rates drop after I took a fixed loan?
Your repayment will not change, but you can consider refinancing — you need to calculate if the savings cover the prepayment penalty.

Can I combine a fixed option with other options?
Yes — most borrowers combine fixed with prime and linked index in one mix.

Does the fixed option include linkage to the index?
No — "fixed non-linked" means there is no linkage at all, unlike a fixed index-linked option.

How It Fits with Future Plans

If you have known future plans (like selling the apartment in a few years, or expecting an inheritance/bonus that will be used for early repayment), it is important to factor this in advance when choosing the size of the fixed portion in the mix — it’s better not to lock in too large an amount in an option that is expensive to exit before the time.

Considering buying an apartment or choosing a mortgage mix?

Check out properties for sale in Ma'ale Adumim and in Jerusalem, and contact the Merkaz HaNekasim team for personal advice.