"Free Kitchen" and a 5-Year Mortgage — Why Developer Incentives Don't Actually Lower the Price

July 24, 20266 min read

In the episode I was a guest on in the "How Did You Make It?" podcast, we touched on a point that has bothered me for years: the gap between an "incentive" and a "discount."

A free kitchen. Furniture. "Five years of developer-financed mortgage." All of these sound like the developer giving something up. But in most cases they're exactly the opposite — an elegant way to keep the apartment price high without it looking that way. 🎯

A discount lowers the number in the contract. An incentive adds something around it and rolls its cost back onto you through the price.

Let's sort this out.

🎁 Why does the developer prefer to give a kitchen rather than lower the price?

The reason is in the statistics, not in generosity.

The apartment price recorded in the deal enters the official housing-price data. When a developer lowers the price, they don't just lose on the single apartment — they drag down the value of the entire project, and the prices they can ask for the rest of the units. One visible price cut costs them far more than the kitchen.

So they give you a product worth tens of thousands of shekels but keep the apartment price in the table high. From the outside it looks like flexibility. In the numbers, the price doesn't budge. 📊

This is exactly what we talked about in the episode: the mechanisms that keep housing prices up even when it seems like "there are deals."

🔍 Incentive vs. discount — the difference that decides

Let's make it simple:

✅ A real discount lowers the number in the contract. Less price = less purchase tax, less equity required, less mortgage, less interest over the years
❌ An incentive keeps the price high and adds a product. You pay purchase tax, equity, and interest on that same inflated price — and get a kitchen you might not have bought for that amount at all

A 60,000-shekel incentive on an apartment whose price is inflated by 100,000 is not an incentive. It's a bad deal in nice wrapping.

🏦 "5-Year Developer-Financed Mortgage" — the asterisk

This is maybe the incentive most important to break down, because it sounds like a financial solution rather than a gift.

The structure: the developer absorbs the repayments, or part of them, for a limited period. Five years, sometimes up to handover. In the short term it really does ease things.

But ask the right question: what happens the day after? After that period you go back to a full mortgage, at the market conditions of that time. If your plan leans on the low repayment of the first years, you may run into a significant jump exactly when the incentive ends.

And one more point: this financing doesn't come free to the developer, and not to you either. Its cost is almost always built in somewhere — usually into the apartment price itself.

👀 I break down developer promotions into real numbers on my WhatsApp channel — you can join here.

🧮 So how do you check whether the "incentive" is worth it?

Three steps, and you can do them even before you sit down with the developer:

What's the price without the incentive? Ask to see the net apartment price, without the kitchen and without the financing. That's the real number
How much is the incentive really worth to you? A kitchen is worth money only if you'd have bought it anyway. Otherwise it's money you didn't plan to spend
Compare to real deals in the area. Not to the developer's price list — to the prices similar apartments actually sold for. If the price with the "incentives" is significantly higher, you paid for the gift in advance

Someone who knows their real mortgage limit and how much equity they're starting from walks into the conversation with the developer strong. I've written about how much equity you need for a mortgage. And if what you're being offered is specifically a 10%-today, 90%-at-handover deal, read this first: The 10/90 deal — opportunity or trap.

💬 Come on, let's talk

Before you sign on an apartment from a developer with an "incentive package," it's worth knowing the real price behind the promotion. We'll break the incentives down into numbers together, check what your mortgage limit is, and figure out whether it's a good deal or nice packaging. An intro call at no cost, no commitment.

I'd like an intro call with Amalia ←

My door's open 🌸 — Amalia

Questions I hear every week

Are developer incentives basically a discount?

Usually not. An incentive like a kitchen or furniture is built into the apartment's price, not deducted from it. The developer gives you a product worth tens of thousands of shekels but keeps the official apartment price high. A real discount lowers the number in the contract. An incentive adds something around it.

What is a \"5-year developer-financed mortgage\"?

An arrangement where the developer absorbs the repayments, or part of them, for a limited period — usually up to handover or a little after. It eases things in the short term, but after that period you go back to a full mortgage at market conditions. It matters to know what happens the day after, not just how comfortable it feels at the start.

Why do developers prefer incentives over lowering the price?

Because the apartment price recorded in the deal enters the official housing-price statistics. If a developer lowers the price, it drags all the prices in the area down and hurts the value of the whole project. An incentive is worth money but doesn't show up as a price drop, which makes it far more convenient for the developer.

So are developer incentives always bad?

No. If you need a kitchen or furniture anyway, a real incentive can save you an expense. The problem starts when the incentive hides an inflated price, or when it pushes you to close a deal you wouldn't have closed on price alone. The question is always: what's the price without the incentive, and how much is it really worth.

How do I know if the price is inflated?

You compare it to prices of real deals that actually closed in the area on similar apartments, not to the developer's price list. If the price with the 'incentives' is significantly higher than similar deals without incentives, you paid for the 'gift' in advance. A preliminary mortgage calculation helps you see this at eye level.