Winning the "Discounted Apartment" lottery (formerly Buyer's Price) is a joyful event that can save you hundreds of thousands of shekels when purchasing your first apartment. However, taking a mortgage in these projects is fundamentally different from buying an apartment in the free market. There are unique rules designed to make it easier for you, but also complex bureaucracy that's important to know to avoid losing eligibility or making costly mistakes.

The big benefit: calculating financing percentages

The biggest advantage in a mortgage for a discounted apartment is how banks calculate the property value. While in the free market the bank provides financing according to the contract price, in these projects the bank may give you a mortgage according to the real market value of the apartment (as determined by an appraiser), not according to the discounted price at which you purchased it. The meaning: you can get a very high financing percentage relative to the purchase price, thus requiring significantly lower equity (minimum 100,000 NIS or 10%, whichever is higher).

Payment schedule and construction input index

Unlike a second-hand apartment where you pay and receive keys, here we're talking about purchasing "on paper". Payments to the contractor are linked to the construction input index, which can make the apartment more expensive by tens of thousands of shekels throughout the construction period. Mortgage consultation for first apartments in these projects focuses on building a smart payment strategy – should you advance payments to the contractor to save on the index? And when to start paying the mortgage (grace period)?

Special challenges

Despite the benefits, there are difficulties: banks sometimes harden their positions on interest rates for Buyer's Price winners, and the process with contractors can be slow and exhausting. Additionally, there's a prohibition on selling the apartment for several years (usually 5 years from receiving Form 4 or 7 years from winning), which requires long-term planning.

Why is it important to take an advisor?

The complexity of calculating financing percentages, dealing with appraisers, and the need to maneuver between current rent payments and future mortgage payments requires a guiding hand. We're here to ensure you take advantage of all the benefits you're entitled to and that you won't be surprised by unexpected costs on the way to your apartment.

Won the lottery? Don't sign anything before consulting. Contact us to build a winning financing plan for your new apartment.