Grace Period in a Mashkanta: What is it and how to save on mortgages i

What is a "Grace Period" in a Mashkanta and who benefits from it?

Published: May 15, 2026 | Updated: May 20, 2026

A grace period in a Mashkanta is a financial tool that allows a borrower to receive a temporary deferral on mortgage loan payments in Israel. This mechanism helps reduce the financial burden during the initial stage of property ownership by postponing the repayment of the principal or the entire payment for a period ranging from several months to several years.

Types of grace periods in Israeli mortgages

Israeli banks offer two main scenarios for payment deferral, which are chosen based on the borrower's current income and life situation.

1. Partial Grace (Grace Helki)

In this mode, the borrower is temporarily exempted from paying the loan "principal" (Keren) but is required to pay interest (Ribit) monthly. This is the most popular option, as it allows for a significant reduction in the monthly payment while the principal amount does not grow.

2. Full Grace (Grace Male)

This is a complete deferral where the borrower pays the bank nothing during the agreed period. However, it is important to understand that the interest that should have been paid is not "forgiven" but added to the principal loan amount. As a result, at the end of the grace period, the total debt is higher than the original amount.

Who benefits from a grace period and when?

Using a grace period is a strategic decision that helps balance a budget during transitional periods. Let's consider the main situations:

• Buying a new construction: While the building is under construction, the buyer often continues to rent a home. A grace period allows them to avoid a double burden (rent + mortgage) until the keys are received.
• Real estate investments: Investors use the deferral to start paying the full mortgage only when the property begins to generate rental income.
• Moving and selling an old apartment: If a new apartment has already been purchased with a mortgage, but the old one hasn't been sold yet, a grace period helps wait out the period until assets are realized.
• Renovations: If major investments in finishing are required after purchasing secondary market property, a payment deferral frees up the necessary funds.

Comparison of mortgage payment options

Below is a table showing the payment structure depending on the selected mode in Israeli banks.

Risks and financial nuances

Despite the obvious convenience, the grace period carries hidden costs that are important to know in advance:

1. Increase in total overpayment: Since the repayment of the principal is delayed, interest is calculated on a larger amount over a longer period.
2. Sharp payment jump: At the end of the grace period, the borrower will have to pay the loan "principal" over a shorter remaining term, which can lead to a significant increase in the monthly payment.
3. Index linkage (Madad): If your mortgage is linked to the Consumer Price Index, then in full grace mode, the debt amount may grow faster than you expected.

Frequently asked questions about grace periods

Conclusion

A grace period is an effective cash flow management tool that makes purchasing real estate in Israel more accessible at the initial stage. However, it requires careful calculation, as temporary relief in payments always leads to an increase in the total cost of the mortgage in the long term. We recommend using a grace period only when it is truly justified by your financial plan.

Disclaimer: This article is for informational purposes only and does not constitute financial or legal advice. Mortgage terms depend on individual borrower indicators and the policy of the specific bank.

Last update date: May 20, 2024.