What Is a Reverse Mortgage (Mashkanta Hafucha)?

A reverse mortgage, known in Israel as a mashkanta hafucha, is a special loan product designed for Israeli homeowners aged 60 and above. It allows you to access part of your home’s value in cash—without selling the property or making monthly repayments during your lifetime.

This option is often used to supplement retirement income, cover healthcare needs, help family members financially, or simply create more flexibility in later years.

Unlike traditional mortgage options where you borrow money to buy a home and repay the bank over time, a reverse mortgage works in the opposite direction: You stay in your home, the bank lends you money against its value, and the loan is only repaid when you sell the property, move out permanently, or pass away.

How does a reverse mortgage work?

To qualify for a reverse mortgage in Israel, you must be at least 60 years old and own a residential property in your name. The home remains yours, and you can continue living there for as long as you wish, without being obligated to make monthly payments.

The funds are provided as a lump sum, monthly income, or as a flexible credit line you can draw from when needed. The exact amount you can borrow depends on your age and the current value of the property. Typically, the older you are, the higher the percentage you can access—ranging from around 15% of the home’s value for someone aged 60, up to approximately 50% for those over 80.

When do I need to repay a reverse mortgage loan?

The loan is generally repaid after one of three events: you pass away, you sell the property, or you move out permanently, for example, to an assisted living facility.

At that stage, your heirs or estate can choose to repay the loan—along with any accumulated interest and fees—to keep the property. Alternatively, the home can be sold to cover the debt, and any remaining funds go to your heirs.

What should I consider before taking a reverse mortgage?

While reverse mortgages offer advantages, there are important points to consider:

• Interest Accumulates: The loan amount grows over time as interest compounds. This can significantly reduce the home’s equity over the years.
• Heirs’ Inheritance: Taking a reverse mortgage can diminish the value of your estate, leaving less for your children or heirs.
• Costs and Fees: Reverse mortgages may involve set-up costs, appraisal fees, legal fees, and insurance requirements.
• Limited Loan Amount: Even if your home is valuable, the percentage you can borrow is capped based on your age.
• Market Conditions: Property value fluctuations can affect your overall financial position in the long term.

How do I know if a reverse mortgage is the right choice for me?

If you’re looking to unlock cash but prefer to stay in your home, a reverse mortgage can be a practical solution. It’s especially suited for retirees who own significant property assets but have limited liquid savings. Still, this type of loan isn’t for everyone. You should consult with legal and financial professionals, fully understand the terms, and have open discussions with your family to avoid misunderstandings down the road.