Mortgage Refinancing — When and How

When to refinance, potential savings, step-by-step process, and refinancing costs.

Mortgage refinancing (Michzur Mashkanta) means replacing your current mortgage tracks with new ones at better terms. In Israel, where mortgages are split across multiple tracks, refinancing can save hundreds or thousands of shekels per month when market conditions change in your favor.

When Does Refinancing Make Sense?

Refinancing is worth exploring when interest rates have dropped significantly since you took your mortgage, when your Prime-linked track has become expensive due to rate hikes and you want to lock in a fixed rate, when your financial situation has improved and you qualify for better terms, or when your CPI-linked balance has grown substantially due to inflation.

How the Refinancing Process Works

You can refinance with your current bank or move to a new one. Get quotes from multiple lenders specifying the new track mix and rates they offer. Your bank will order a new property appraisal. If you switch banks, the new lender pays off your old mortgage and issues a new one. The entire process typically takes 4-8 weeks.

Costs of Refinancing

Refinancing is not free. Costs include an early repayment fee (Amas) on your existing tracks, a new property appraisal fee, legal fees for the new mortgage registration, and possibly a mortgage broker's fee. Calculate whether the monthly savings outweigh these one-time costs — a good rule of thumb is that you should break even within 2-3 years.

Tips for a Successful Refinancing

Compare at least three offers from different banks. Negotiate — use competing offers as leverage. Consider whether to shorten your loan term (higher payments but less total interest) or keep the same term (lower payments, more total interest). Have a mortgage advisor review the numbers before committing.

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The information on this page is for educational purposes. Please consult a professional before making financial decisions.

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Frequently asked

+−When should I consider refinancing my mortgage?

When interest rates have dropped since you took your mortgage, when your Prime track is expensive due to rate hikes, when your financial situation has improved, or when your CPI-linked balance has grown due to inflation.

+−What does refinancing cost?

Costs include an early repayment fee (Amas) on existing tracks, a new property appraisal, legal fees, and possibly a broker fee. Calculate whether monthly savings outweigh these costs — aim to break even within 2-3 years.

+−Can I refinance with a different bank?

Yes. The new bank pays off your old mortgage and issues a new one. Compare at least three offers and use competing quotes as negotiating leverage. The process typically takes 4-8 weeks.

+−What is an early repayment fee (Amas)?

When you pay off a fixed-rate track early, the bank charges a fee to compensate for lost interest income. The fee depends on the difference between your rate and current market rates, and the remaining term.

+−How do I know if refinancing is worth it?

Calculate the total savings from lower rates over the remaining mortgage term, then subtract all refinancing costs (Amas, appraisal, legal fees). If you break even within 2-3 years, refinancing is likely worthwhile.

+−Can I refinance just one track of my mortgage?

Yes, you can refinance individual tracks rather than the entire mortgage. This is useful if one track has become expensive (like a Prime track after rate hikes) while others remain favorable.

+−Do I need a new property appraisal to refinance?

Yes, the new lender will require a current property valuation. If your property has increased in value, you may qualify for better terms due to a lower loan-to-value ratio.