A foreign currency – USD/Euro – linked mortgage based on the LIBOR interest rate and which varies every three months. The mortgage is granted for a period of 4-15 years with principal + interest payments.
This mortgage does not have a floor threshold for the basic rate (i.e. the foreign currency exchange rate upon granting the loan). Thus, in instances in which the foreign currency exchange rate dips below the basic rate, the borrower will enjoy a reduction in the monthly repayment amounts.
This loan can be paid at an earlier date without payment of interest differential capitalization fees.
What is the LIBOR interest rate?
The annual interest rate for interbank deposits in the loan currency in the Eurocurrency market in London, England. The LIBOR interest rate is determined by periods, for example: 3-month LIBOR, 6-month LIBOR, etc.
Who might benefit from this loan?
The foreign currency linked mortgage may be suited for borrowers whose income – in Israel or abroad – is linked to a foreign currency and to borrowers who invest in yielding assets whose rental fees are set forth in a foreign currency.