Aviv Melisron Offers Loans Against Existing Property Amidst Housing Market Slump
Translated & summarized from Globes by baba
Real estate firm Aviv Melisron is offering a new financing plan where buyers can use existing property as collateral for a loan, with the company covering interest until occupancy. This initiative aims to help upgraders and investors navigate the slow housing market. Experts caution that the plan carries significant risks, particularly for first-time buyers and those using family property, and emphasize the importance of a clear repayment strategy after the initial period.
The story in 5 lines · by baba
- Aviv Melisron offers loans against existing property to bypass initial down payment requirements.
- The company covers financing costs and interest until the buyer occupies the new apartment.
- The plan targets home upgraders, investors, and first-time buyers using family collateral.
- Experts warn of high risks, especially for first-time buyers and when family property is pledged.
- The primary challenge is the repayment of the loan after the occupancy period ends.
In response to a stagnant housing market and difficulties buyers face in completing transactions, real estate company Aviv Melisron is introducing a creative financing solution. The new model allows apartment buyers to secure a loan by pledging an existing property as collateral, rather than requiring immediate liquid capital. Aviv Melisron will cover financing costs and interest until the property is occupied.
This initiative is available throughout November and December across several of the company's projects in locations like Givatayim, Tel Aviv, Netanya, and Herzliya. The plan is designed for various buyer types. Those upgrading their homes can use their current residence as security to purchase a new one before selling their existing property. Real estate investors can leverage their owned properties without liquidating other investments or savings. First-time buyers without property can use a close relative's property, such as their parents' home, as collateral.
Mortgage advisor Yonatan Berliner noted that this is an evolution of contractor loans, targeting more expensive properties. He believes it's most suitable for upgraders who plan to sell their current home, provided the balloon loan repayment date is at least a year after the planned occupancy. However, Berliner warns against viewing it as a universal solution, citing high risks for first-time buyers and investors due to potential over-leveraging. He advises caution, especially when parents' homes are used as collateral, and recommends avoiding balloon loans without a clear repayment source.
Meir Vider, CEO of Vider Mortgages, echoed these concerns, calling the plan a "creative financing solution" that doesn't eliminate the need for equity but rather defers the requirement for liquid funds. He highlighted that while the developer covering costs until occupancy is a significant advantage, the key challenge lies in the post-occupancy phase. Buyers must consider potential delays or lower-than-expected prices when selling their existing homes. For those using parents' property, Vider stressed that parents also become part of the financial risk, emphasizing that a good financing solution ensures long-term ability to meet obligations.
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