Fixed rate loans are cheaper the shorter the duration, while adjustable rate loans are typically the same rate – regardless of the term.
If you plan to take a 20 year term comprising of both fixed and variable rates (short-term variable rate loans have no pre-payment penalty), take a 15 year fixed on 70% of the loan and a 30 year adjustable on 30% of the loan instead of a 20 year term on both.
This will yield interest rate savings with minimal risk.
2) Minimize risk by matching the mortgage to the currency you earn
The market today offers foreign currency loans in a variety of currencies – in both fixed and variable rates.
Israeli citizens who earn their income in foreign currency, and who may not take more than 1/3 of their loan in a variable rate (due to banking restrictions), may still structure the entirety of the loan in foreign currency.
If renting the property out, consider taking a portion of the loan in NIS as the rental market today in Israel is predominantly priced in NIS.
3) Don’t be too afraid of the adjustable:
With NIS adjustable rates under 1% and interest rates forecasted to remain low, it will likely take a long time for rates to move up enough to make the NIS adjustable loan uneconomical.
Mixing a fixed rate with an adjustable under 1% can help lower your effective interest rate significantly while paying down a greater portion of your principal with every monthly payment.