Written and professionally reviewed by the Ailon Financing Solutions team
Housing developers do not necessarily have to close the existing mortgage and take out a new one. If the terms of the existing loan are suitable, you can ask the bank to replace the mortgaged property with the new property. This is a mortgage foreclosure process.
What remains and what changes
The goal in towing is to keep the existing loan and replace the collateral. The new property still needs to undergo a legal and appraiser inspection, and the bank examines whether the collateral after the exchange matches the loan balance and its requirements.
Proper Banking Management Instruction 451 of the Bank of Israel states that the bank will not refuse towing or change the terms of the loan except for reasonable reasons, and must inform the borrower of the reason. The provision does not eliminate the need for property approval, documents and appropriate collateral.
Towing vs. recycling
The comparison should be made for the same amount and the same period:
| alternative | What are they checking? |
|---|---|
| drag | Maintaining the existing routes, adjusting the replacement property, safety and implementation costs |
| recycling | New interest rate and mix, early repayment fee, transition costs and flexibility |
| combination | Withdrawing part of the balance and receiving additional financing, subject to approval and ability to repay |
Good interest rates in the past are not a sufficient reason to drag. We also check linkage, the remaining period, the amount of the refund, risk in the routes and the family's needs after the move.
The time gap between the transactions
The main challenge is the order of payments. If the old apartment is sold before the new property is ready for lien, the bank needs a solution for the interim period. Do not assume in advance which solution will be approved. Ask the bank for a written outline and coordinate it with the lawyer and with the two contracts.
Before signing centers:
- Current balance and details of the existing mortgage routes.
- Early payment fee estimate.
- The sales and purchase contracts and the payment schedules.
- Draft or confirmation of rights of both properties.
- Appraisals or appraisal requirements for the new property.
- The bank's approval for the towing outline and the interim period.
use theThe recycling calculator to build a comparison alternative, and bThe mortgage comparison tool To compare total payment, risk and flexibility. If additional funding is required, check also The refund calculator.
Official sources
- Order of proper banking management 451, procedures for granting housing loans
- My treasurer's glossary
- Application for registration of her mortgage, Ministry of Justice
The information is general. The order of payments, collateral and documents must be checked with the bank and the lawyer before committing.
