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Looking to improve your mortgage terms? Has your mortgage not been checked for more than a year? Is your monthly payment weighing on you?

If you answered yes — you need us! Your mortgage may be costing you much more than it should.

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What is mortgage refinancing? Who is it right for? When does it make sense? How much can you save?

In this article we'll explain the concept of mortgage refinancing in simple terms, covering all its aspects.

When is it worth checking if you should refinance?

1. When market interest rates are better than your current mortgage rate

2. When you anticipate risk or a rate increase in a particular track and want to switch to another

3. When your mortgage-to-property-value ratio has dropped to a lower interest bracket (explained below)

4. When you want to shorten your mortgage term

5. When you want to extend your mortgage term to reduce your monthly payment

In the past, mortgages were issued at significantly higher interest rates than those offered today.

In recent months we've seen a massive wave of refinancing driven by a low-interest environment and attractive terms on new mortgages.

Our recommendation: stay on top of things and check your refinancing options annually — comparing your current mortgage terms against what banks are currently offering.

Beyond comparing rates, there's another key factor to consider: the early repayment penalty.

This fee arises from the difference between the average interest rate when the original mortgage was taken and the average rate at the time of refinancing. If rates are higher at the time of the refinance, there will be no early repayment penalty. However, if rates are lower, a penalty may apply on certain mortgage tracks. It's important to factor in the full remaining balance plus any early repayment penalty to get an accurate picture of whether refinancing is worthwhile.

The potential savings from refinancing can reach hundreds of thousands of shekels and monthly payment reductions can amount to hundreds of shekels.

A note on interest rate brackets:

Beyond factors like customer and collateral ratings, banks price mortgages based on the loan-to-value (LTV) ratio:

• Bracket 1 (lowest rate): up to 45% LTV

• Bracket 2: 45%–60% LTV

• Bracket 3 (highest rate): above 60% LTV

The reason is simple — the higher the LTV, the greater the bank's risk. The Bank of Israel therefore requires banks to hold additional capital reserves as LTV increases.

How does this relate to refinancing? Say you purchased a property with a 65% LTV mortgage. Over time, due to rising property prices and monthly repayments, your LTV has dropped to 55%. You've moved down a rate bracket — but you're still paying the interest rate from when the loan was originally issued. In this case, a refinancing check is strongly recommended.

Book Your Free Mortgage Review Today : 03-947-7729, levi@tsuott.co.il