Before the bank gives final approval for a mortgage, it sends an appraiser to assess the value of the apartment. The appraisal determines how much the bank is willing to finance.
Why is it so important?
The financing ratio (for example 75%) is calculated against the lower of the purchase price and the appraised value. A low appraisal = a smaller mortgage = more equity needed. Financing limits
An example
You bought for NIS 2,000,000. The appraiser valued the apartment at NIS 1,900,000. - 75% of 2,000,000 = NIS 1,500,000 (what you expected). - 75% of 1,900,000 = NIS 1,425,000 (what you will get). - You are short NIS 75,000.
What to do when the appraisal is low
- Check the report – sometimes there are errors (area, floor, parking, storage room).
- Ask for a re-examination with relevant comparable deals.
- Add equity or change the mix.
Your own appraiser?
Before an unusual purchase (an apartment with registration problems, building additions, or a price above the market) consider hiring your own appraiser before signing.