Understanding the 90 10 Property Purchase. Rifka Lebowitz CFP & Real Estate Agent Yaron Goldberger.

Introduction

This tutorial aims to explain the concept of the 90/10 property purchase scheme, as discussed by Rifka Lebowitz and Yaron Goldberger. Understanding this property purchase model can help potential buyers navigate current real estate options, especially in light of changing VAT rates and developer offers.

Step 1: Understanding the 90/10 Property Purchase Model

The 90/10 model refers to the payment structure in property purchases:

• 90% Financing: Buyers secure 90% of the property value through a mortgage or other financing.
• 10% Down Payment: Buyers are required to make a 10% down payment at the time of purchase.

Practical Advice

• Evaluate Your Finances: Ensure you can comfortably make the 10% down payment and afford the monthly mortgage payments for the 90% financing.
• Compare Offers: Look at various financing options to find the best interest rates and terms.

Step 2: Exploring Alternative Models

Other common models include:

• 85/15: 85% financing with a 15% down payment.
• 80/20: 80% financing with a 20% down payment.

Practical Advice

• Consider Your Situation: Depending on your financial standing, one model may be more suitable than the others. Analyze how much you can afford to pay upfront versus what you can finance.

Step 3: Current Market Context

As of November 2024, the VAT is at 17%, but it is anticipated to rise to 18%. This change may impact property prices and financing options.

Practical Advice

• Stay Informed: Keep an eye on VAT changes and how they might affect property costs.
• Act Quickly: If you find a good deal, it may be wise to proceed before any price increases due to VAT changes.

Step 4: Developer Offers and Negotiations

Developers are currently offering favorable terms, such as a 15% down payment with the remainder due in a few years. This could vary as the market changes.

Practical Advice

• Negotiate: Don’t hesitate to negotiate terms with developers. Ensure that you understand all conditions of any package deal.
• Look for Package Deals: Some developers may offer added benefits or discounts if you purchase a property as part of a package.

Conclusion

The 90/10 property purchase model allows for significant financing options, making it accessible for many buyers. With the current real estate landscape and upcoming VAT changes, it's essential to evaluate your financial situation and explore different payment models. Actively seek out favorable developer offers and remember to negotiate terms that work for you. By staying informed and prepared, you can make smarter property investments.