When it makes sense to check a refinance
A refinance can lower the cost, fit the repayment to a new situation, or show that staying put is better. When it is worth checking, and what to weigh before you decide.
By Lidor Levin3 min readTracks and refinancing
Refinancing means replacing all or part of your existing mortgage with a loan on different terms. Sometimes it lowers the cost, sometimes it fits the repayment to a new situation, and sometimes the check shows it is better to leave the mortgage as it is. That is a good outcome of a check too.
When it is worth checking
- Rates have changed since you took the mortgage, and your mix no longer reflects today's conditions.
- The monthly repayment is too heavy, or the opposite: your income has gone up and you want a shorter term.
- A variable track is approaching its reset, which is a good moment to think about whether to stay in it.
- Your family or work situation has changed, and your plans are no longer the same plans.
- You have other loans and are thinking about consolidating them into the mortgage.
What to check before deciding
The question is not only whether the new rate is lower. You look at the whole picture:
- Early repayment fees: on some tracks repaying ahead of time carries a fee, and its size depends on the track and the timing. Ask for an up-to-date calculation.
- Other costs: expenses that may come with a new loan, such as opening a file, a valuation and insurance.
- The total cost: the monthly repayment can drop even while the total you pay goes up, for example when the term gets longer.
- The risk: a new mix can be cheaper today and more sensitive to changes tomorrow.
For illustration
Say a refinance cuts the monthly repayment by ₪300 but needs ₪6,000 up front in fees and costs. Only after 20 months does the monthly saving cover that cost. If you plan to sell the property before then, the refinance may not pay off. The figures are for illustration only, and every case is checked on its own numbers.
What to prepare for the check
A current repayment schedule for the existing mortgage, a land-registry extract, and an honest picture of your income, commitments and plans for the next few years. From these you can work out what the current mortgage costs and compare it with the alternatives. How the tracks themselves react to change is in the article on the mortgage mix, and more on refinancing support is on the services page.
Avoid a misleading comparison
- Request an up-to-date payoff balance and a breakdown of fees, rather than relying on the last repayment notice.
- Compare alternatives with similar end dates too: extending the term can lower the instalment without reducing the cost.
- Consider an earlier sale as well; a simple break-even calculation does not capture every future rate or inflation change.
For details of the refinancing and early-repayment process, see the Bank of Israel guidance.
Common questions
Does refinancing always save money?
No. Sometimes the fees and other costs are higher than the saving, and sometimes the repayment drops while the total cost rises. That is why you look at the whole picture before deciding.
Can I refinance only part of the mortgage?
You can check refinancing one track or several and leave the rest as they are. What makes sense depends on the tracks, the fees and your plans.
General information only, not personal advice. Every figure here is for illustration.
Further reading
Want to look at this for your own case?
Not every refinance pays off, so you check before you decide. On the intro call we'll look at your current mortgage together and see whether it is worth going further.
Book an intro call
