What happens to my mortgage in Israel during a war?
A buyer abroad asks before signing; a resident asks when the sirens go off. The answer rests on three mechanisms: the Bank of Israel’s deferral framework, the two mandatory insurance policies on the loan, and the public fund that compensates war damage. Here is what was applied from 7 October 2023 through 2024, and what applies in November 2026.
The short answer
As of November 2026, the ordinary mashkanta (mortgage) rules apply: payments are due, nothing is suspended. When a war breaks out, the Bank of Israel activates a relief framework, as it did on 15 October 2023 and extended several times through 2024: a 3-month payment deferral with no interest or fees for called-up reservists, evacuees, residents of frontline communities and bereaved families; a 3-month deferral with interest, no fees, for any other borrower who asks; a freeze on foreclosure proceedings and late penalties. The mandatory life insurance on the loan covers death, including in wartime under most policies. Physical war damage is compensated by the state Compensation Fund, not by building insurance, which excludes acts of war.
The figures to remember, November 2026
- Interest-free deferral (first circle, 2023-2024)
- 3 months
- Deferral with interest (all borrowers)
- 3 months
- Deferral fees
- ₪0
- War damage compensated by
- the state
The Bank of Israel deferral framework: what was applied in 2023-2024
On 15 October 2023, eight days into the war, the Banking Supervisor published a uniform framework that every bank adopted. It separated two circles of borrowers and was extended in stages (December 2023, March 2024, then to the end of 2024 for the most affected groups). A comparable, shorter framework was reactivated during the hostilities with Iran in June 2025. Nothing guarantees the next framework will be identical, but it is the reference.
| Group | Mortgage deferral | Cost | Other measures |
|---|---|---|---|
| First circle: called-up reservists (tzav 8), evacuees, residents within 30 km of Gaza and later evacuated northern communities, families of hostages, missing persons and victims | Up to 3 months, renewed through successive extensions | No interest, no fees: cost absorbed by the bank | Account-fee exemption, consumer-loan deferral, no late penalties |
| Second circle: any other borrower who applies | Up to 3 months | Interest at the loan rate, no processing fee; deferred amount spread or added at the end of the loan | Deferral also available on consumer credit |
In practice, on a ₪1.5M mortgage at ₪6,000 a month, a three-month deferral with interest cost a second-circle borrower roughly ₪1,500 to ₪2,000 in extra interest over the life of the loan; for the first circle, nothing. The deferral was requested online from the bank, and did not appear as a missed payment in the Bank of Israel credit data.
Life insurance, building insurance, war damage: who pays what
Every mashkanta comes with two mandatory policies, taken out through the bank or, more cheaply, with an outside insurer.
- Mortgage life insurance (bituach hayim): if the borrower dies, the insurer repays the outstanding principal to the bank and the heirs keep the property free of the mortgage. Most Israeli policies cover death from any cause, war included, for a civilian. Some policies carry a clause on active military service or combat zones: read it before signing, especially for a reservist borrower.
- Building insurance (bituach mivneh): covers fire, water damage, earthquake. It excludes acts of war and terrorism, as everywhere in the world.
- State Compensation Fund (Keren Pitzuim, mas rechush): this is what covers direct damage to a home caused by a hostile act, under the 1961 Property Tax and Compensation Fund Law. Claim on gov.il, assessment by the fund, compensation or repair. In 2023-2024 the fund also paid temporary-housing allowances to evacuees. The bank’s mortgage stays registered on the repaired property.
An off-plan buyer is covered differently: until delivery, the site is insured by the developer and the instalments are guaranteed under the Sale Law; delivery delays caused by the war were, in 2023-2024, largely recognised as force majeure. See buying off-plan from a developer.
Foreclosure and missed payments during the emergency
In October 2023 the Enforcement and Collection Authority suspended ongoing proceedings, and the Bank of Israel asked banks not to start mortgage enforcement or charge late penalties during the emergency period. A borrower whose payment bounced was not blacklisted. These measures were wound down over 2024: in November 2026, a missed payment again follows the ordinary path, reminder letter, formal notice, then a long procedure (at least a year) before any forced sale. The right reflex, in wartime as in normal times, is to request the deferral before the due date, not after.
What it changes for a buyer who lives abroad
For a non-resident borrower, a war changes neither the contract nor the schedule. Debits continue from the Israeli account, and the only immediate effect runs through the exchange rate: in October 2023 the shekel lost about 5% against the dollar and the pound within days, before the Bank of Israel announced a $30 billion reserve-sale programme that stabilised it, and it then recovered beyond its pre-war level in 2024. A borrower who funds the account from abroad therefore sees the payment in dollars or pounds move by a few percent either way, while the shekel amount does not change.
Two precautions suit this profile: keep three to six months of payments ahead in the Israeli account, so as not to depend on an international wire during a period when banks process requests slowly, and favour a large fixed unlinked share, since a war generally pushes inflation and therefore the madad (consumer price index) up. How the loan is built for a buyer abroad is detailed in mortgages for non-residents, and current rates in Israeli mortgage rates.
What to check in your loan contract
- The deferral clause (dchiyat tashlumim): outside a crisis, most banks allow one or two payment deferrals a year on request, with interest. Check the number and the cost.
- Life insurance exclusions: military service, combat zones, waiting period. An outside insurer is often 20 to 40% cheaper than the bank’s, for the same cover.
- Building insurance: sum insured equal to rebuilding cost, not purchase price; standard war exclusion, offset by the Compensation Fund.
- The track mix: at least one third fixed, and for income in foreign currency, a limited CPI-linked share.
- Acceleration events: payment default, false declaration, loss of the property. A state of war is not one of them.
To simulate the effect of a deferral or a rate change on your payment, use the mortgage calculator. The full rules of Israeli mortgage lending are in the mashkanta guide.
Frequently asked questions
Is the payment deferral automatic during a war?
No. In 2023-2024 you had to apply to your bank, online or at the branch, showing you belonged to the relevant group (call-up order, address in an evacuated community). Other borrowers were accepted without documentation, but the deferral carried interest. The banks processed tens of thousands of requests within weeks.
Does a deferral cost money?
For the first circle (reservists, evacuees, frontline residents, bereaved families), no: the three deferred months carried neither interest nor fees, the cost being absorbed by the bank. For other borrowers, the deferred payments kept accruing interest at the loan’s rate, added at the end of the loan or spread over the following instalments, with no processing fee.
Does building insurance pay for an apartment hit by a rocket?
No, private insurance excludes acts of war. The Compensation Fund (Keren Pitzuim, under the Tax Authority) compensates direct damage caused by hostile acts, under the 1961 Property Tax and Compensation Fund Law. You file on gov.il, a fund assessor visits, and the property remains mortgaged to the bank.
Can the bank call the loan during a war?
No, as long as you keep to the schedule or to an approved deferral. The acceleration clauses in Israeli loan contracts cover payment default, false declarations or loss of the property, not a state of war. In 2023-2024 the Bank of Israel also asked banks to suspend foreclosure proceedings and late fees for several months.
How we work
Every amount, bracket and rate on this page is checked against the official source listed at the bottom and dated. When a schedule or rate changes, the page is updated within days. Our methodology.
Sources
Have your loan offer reviewed before you sign
An English-speaking mortgage broker checks the deferral clauses, the insurance and the track mix of your offer, and negotiates what can be negotiated. Describe your project and your bank.