Mortgage Refinancing: How to Save Thousands by Switching Tracks

Mortgage refinancing ("machzor mashkanta") means restructuring your existing mortgage, either by moving to a different bank or renegotiating terms with your current bank. Done right, it can save you a significant amount of money.

When Should You Consider Refinancing?

**Interest rates have dropped** — If the market prime rate has fallen since you took your mortgage, refinancing could lock in a lower rate.

**Your financial situation has improved** — A better credit rating or higher income may qualify you for better terms.

**You are on a variable rate and want stability** — Switching to a fixed rate protects against future rate hikes.

**Mid-way through your mortgage** — The most savings are typically achieved 3-7 years into the mortgage.

How to Calculate Potential Savings

The key metric is the "saving gap": compare the total interest you will pay under your current mortgage vs. the new terms, minus the refinancing costs (usually 0.5-1% of the loan amount, plus attorney and appraisal fees).

The Bank Tender Strategy

One of the most effective techniques is running a competitive tender between banks:

1. Get a proposal from your current bank

2. Take it to 2-3 competing banks and ask them to beat it

3. Let the banks compete — each round improves your terms

4. Use the best offer to negotiate further with your current bank

When Refinancing Does NOT Make Sense

Get a Professional Analysis

A mortgage advisor can run precise calculations comparing your current situation against multiple refinancing scenarios, accounting for all fees and penalties. This analysis alone can reveal whether refinancing is worth your while.