Written and professionally reviewed by the Ailon Financing Solutions team
greetings And now the work begins
Winning a price lottery for a tenant is a real opportunity to purchase an apartment at a price significantly lower than the market price. It is also a complex process with strict schedules, and most of the winners come to it without previous experience.
This guide goes over what's important to know, in the correct order of operations.
Why does the mortgage at the Mechir Lemishtaken work differently?
This is the point that most people miss.
In government housing programs, there are special value rules that may allow the bank to recognize a value different from the contract price, subject to the instructions of the Bank of Israel, to valid appraisals and ceilings. The actual financing rate is also determined according to the transaction classification, repayment capacity and bank policy.
Numerical example:
| parameter | amount |
|---|---|
| contract price | 1,500,000 shekels |
| A value that the bank is willing to recognize | Determined according to the instructions, the plan and the assessments |
| Regulatory funding cap | is not a credit approval and does not guarantee the full amount |
| Equity required | The difference that is not funded, plus expenses and reserve |
When the bank recognizes a value higher than the contract price in accordance with the rules, this may reduce the required equity relative to a normal transaction. Capital is still required from approved sources and repayment capacity that matches the loan amount.
important: The numbers here are for illustration only. The exact data varies according to the project, the appraisals and the bank.
How much equity do you really need?
There is no uniform minimum that fits every winner. The amount depends on the price of the apartment, the value recognized by the bank, the instructions of the program, possible grants, the approved financing rate and transaction expenses.
If you don't have the amount in cash, there are acceptable sources of payment:
- Liquid training funds
- External loans
- Help from parents
- Encumbrance of an existing property
Each source has a different effect on the repayment ratio that the bank calculates. An external loan, for example, is counted as a liability and reduces the mortgage you can get. Therefore, the combination should be planned in advance.
The schedule is determined in the project and the file
| stage | duration |
|---|---|
| Information conference | starting point |
| Choosing an apartment | According to the summons and the rules of the project |
| Signing a contract | according to the date given to the winners |
| Execution of the mortgage | According to the payment schedule, the bank, the appraisals and the collateral |
Two critical points:
- Highly recommended Get approval in principle and check capacity before signing the contract
- worthwhile Arrive with a financing picture already at the apartment selection stage
The reason for the second point is simple: without knowing how much money you will get, you choose an apartment blindly.
Which apartment to choose within the project
This is a part that most winners underestimate, and rightfully so.
Within the same project there are significant differences between apartments: floor, air directions, interior planning, location in the building, future improvement potential. Exactly the same price, completely different value.
The choice affects two things: how you will live in the apartment, and how much it will be worth when you want to sell.
The four steps in the financing process
Step 1: Getting to know and building a financial profile Analysis of financial capabilities and needs. Initial consultation, free of charge.
Step 2: Planning the purchase budget Equity, mortgage and other sources. At this stage, disposable income, existing obligations, repayment capacity and desired monthly repayment are calculated.
Step 3: Obtaining approval in principle Preparing a file and submitting an application to the bank. The duration of treatment varies according to the bank, the completeness of the documents and the complexity of the case. The approval is conditional on the verification of the data and the inspection of the property.
Step 4: Building a mix Interest tender, correct distribution of years, management of monthly repayment and selection of the loan mix.
The collateral phase
After the execution of the mortgage comes the collateral phase: signing the mortgage documents at the bank, coordinating with the contractor, and receiving the collateral.
The scope of the accompaniment at this stage is determined in the written offer. You should find out in advance what is included, who handles the coordination with the bank and the contractor, and what is considered an additional service. The details of the route appear inThe service page.
The common mistakes
- choose an apartment before knowing what the budget is. The most expensive mistake.
- Start the financial process too late. The schedules are rigid.
- To treat all the apartments in the project as equal. they are not.
- Take the mix that the bank offers by default. This is a starting point, not the end of the verse.
- Not checking the effect of each source of equity on the return ratio.
The bottom line
The win may embody a significant benefit, but the financing still affects the overall cost and risk over the years. The correct way is to compare scenarios by numbers, and not to assume that the price discount solves the refund question.
Start from the financial profile, not the apartment.
