Mizrahi Tefahot Bank launches a "reverse mortgage" loan route which resulsts in a monthly grant

Banks begin to squander to pensioners with apartments: After a long pilot that lasts for almost a year, Mizrahi Tefahot Bank launches a "reverse mortgage" loan route, which allows the older population to lend the apartment to the bank for a lump sum or monthly grant.
Mizrahi Tefahot calls the product “pension mortgage”, in which it offers three routes: a lump sum payment (suitable especially for large one-time expenses, such as a deposit to move into sheltered housing); Receiving a fixed monthly allowance for 15 years; And receiving a flexible annuity under which the borrower will receive a monthly credit limit that is fixed in advance and a dedicated credit card, even for 15 years. The borrower can choose whether to repay part of the loan in these 15 years; Or pay only the interest and at the end of the period to repay the fund (balloon loan). The Bank also offers an option not to pay at all in the first 15 years, but in this way the borrower accrues a considerable payment towards the end of the loan period due to the interest rate effect.
This branch of mortgages has so far been operating outside the mainstream, and the bank's decision, which is the largest player in the mortgage market, may indicate a trend change and significantly increase the scope of use of this product in Israel.
This pathway known as "Reverse Mortgage" is one of the world's existing solutions for improving the income of adults. Retiring people take out a long-term loan and lend it to their home, so that the loan repayment is likely to offset their inheritance for their children.
Under the terms offered by Mizrahi Tefahot, after 15 years, the repayment terms with the borrower are determined. In the event that he passed away during this period, conditions are set against his heirs. At this point, you can choose between repayment of the full loan or spread over another 15 years. Since this is usually a high amount of hundreds of thousands of shekels, one of the options for repaying the loan (especially if the borrower died) is of course to sell the property owned by the borrower and thus repay the amount.
However, because it is a complex product that for the first 15 years there is a possibility that it will not be repaid at all, its interest rate will be higher than its normal mortgage. For example, in the fixed track, it is expected to average 4%, compared to 3.5% -3% on the same route in its regular mortgage. The volume of this type of mortgage that a borrower can receive is worth up to 45% of the borrower's property, lower than regular mortgages that can reach up to 75% of the value of the property.
As part of the pilot run in 18 branches of the bank, loans totaling NIS 100 million have been granted to date. The Bank has contacted 1,300 interested parties, of which the Bank has approved about 500 loans.