Another Loan Against Your Home: From October, Existing Repayments Secured on the Same Property Also Count
Homeowners seeking an additional loan secured on their property must account for an updated repayment capacity calculation. From 1 October 2026, the amendment to Bank of Israel Directive 329 applies, clarifying that monthly repayments also include previous loans secured on the same property when their remaining term exceeds 18 months. This also applies to loans provided by another bank or organization.
The payment‑to‑income ceiling of 50 percent of disposable income is not new. The change concerns how obligations are combined for the calculation. For someone requesting additional credit, it does not necessarily mean rejection, but it does require examining the full picture of debt secured on the home before relying on the new loan amount alone.
What exactly took effect in October
The Bank of Israel published the amendment to the monthly repayment definition in February. A June circular postponed the relevant provision's start from 1 July to 1 October. This is therefore neither a new interest rate decision nor a new repayment ceiling, but a clarification of credit calculations taking effect.
The wording in the Bank of Israel circular on monthly repayment calculations addresses the requested loan and previous debts secured on the same property. It also includes debts provided outside the bank receiving the application. Applying to another bank therefore does not erase an obligation meeting the directive's conditions. The questions are which debts exist and how they relate to the property.
The June circular also contains a separate clarification concerning the directive's application to residential property in Israel. These are two distinct updates: clarification of scope and postponement of the calculation amendment. For an Israeli homeowner seeking additional credit secured on the home, the practical assessment concerns repayments and income recognized for the application.
Why a relatively small loan can change the picture
An arithmetic example illustrates the difference. Suppose recognized disposable income for the assessment is NIS 20,000, the existing repayment on a relevant loan is NIS 6,000 and the proposed repayment on an additional loan is NIS 3,000. Combined repayments total NIS 9,000, or 45 percent of disposable income. Looking at the new loan alone would show only 15 percent.
This is an illustration only, with no proposed interest rate or loan amount. It assumes the existing debt is included and no relevant exception applies. A result below 50 percent does not guarantee credit approval: the bank still assesses the application under applicable rules and its own lending considerations. Equally, the amendment does not mean every applicant's loan amount will be cut by a fixed percentage.
The term disposable income also deserves attention. Under the directive, it means monthly net income less fixed expenses as defined. The salary on a payslip is therefore not always the final denominator in the calculation. Before dividing the figures yourself, ask the bank to explain which income was recognized and which obligations were deducted.
Not every debt is treated the same way
The amendment does not automatically turn every consumer loan into a housing loan. It concerns Directive 329's definitions and repayments connected with security over the same property. Other loans may be relevant to fixed‑expense calculations, but an amount added to monthly repayments must be distinguished from an expense deducted from income. The same obligation should not be counted twice.
The directive also contains exceptions, including provisions concerning bridge loans and certain general‑purpose loans. Anyone who believes their application falls within an exception should request assessment under the relevant section, including the amount, term and loan type. The marketing label "debt consolidation" alone does not explain which banking definition applies to the product.
The new rule is also not notice of a change to an existing mortgage's monthly payment. It concerns assessment of an additional application. Someone who is not seeking new credit should not infer from the headline that their standing payment changes in October. A possible repayment change due to interest or indexation is a separate matter to check against the existing loan's terms.
If an offer includes a grace period, ask to see the repayment after it ends. The directive addresses calculation of the expected payment after the grace period, so the low initial amount is not necessarily the figure used to assess repayment capacity.
What to prepare before approaching the bank
Collect details of loans connected to the apartment: lender, outstanding balance, monthly repayment and end date. Also prepare documents showing income and fixed obligations. If another organization holds some of the information, request a current document. A complete picture at the outset makes the calculation understandable without relying on memory of an amount borrowed years ago.
At the meeting, ask to see the calculated payment‑to‑income ratio and the figures included. If the purpose is to replace existing debts rather than add to them, clarify which loans will be repaid as part of the transaction and ask how this is handled in the assessment. Do not assume an old preliminary offer necessarily reflects the new application and current figures.
Finally, compare the cost of credit and its term as well. A lower monthly repayment may come from a longer repayment period, so it does not alone measure total cost. The Bank of Israel clarification requires repayments to be viewed together; households should extend that view to the amount paid over the loan's entire life.
Read also: Interest Rates and Mortgages: Calculating Payments Without Guessing
