Despite its great importance and economic ramifications, it seems that the act of recycling
the Mishkan

is

not at all in the consciousness of the families in Isra

L.

Meitav Company Dash Mortgage Consultants conducted research through the Panels Research Institute To examine awareness and motivation for mortgage refinancing. The findings indicate that only one in five

Mortgage

holders in Israel noted that

previously refinanced

mortgages. The survey also revealed that the main reasons are the main reasons not to refinance from a mortgage

Among the respondents, there is

aversion to the procedure involved in recycling and fear of fines and fees

.”

“Recycling is a second chance to make the right and smart move, even if you made a mistake at the first stop when you took out the mortgage,” says Uriel Lederberg, CEO of Paamonim, an organization that helps families manage their finances properly. “Those families who know there is such a thing as mortgage refinancing are already highly financially aware. We want it not to be just a small percentage, but for every family to know this possibility from the very beginning.” At the same time, Lederberg warns against overrelying on recycling: “When taking out a mortgage, you must take into account all the considerations and checks that must be done and not rely on refinancing and updating once every few years. You must prepare accordingly before taking out the mortgage and at the same time refinance and improve the conditions once every few years.”

Zafrir Aqab, CEO of Ein Tzofia Economic Consulting, which specializes in advising small and medium-sized businesses, is also familiar with the problematic lack of planning and low awareness. “Self-employed people who have encountered financial difficulties often come to me, and I see that they haven’t separated the family account from the business account. The mortgage suffocates them and makes it difficult for them to run the business, and they don’t know the possibility of refinancing it under improved and convenient conditions.” The first action Zafrir takes in these cases is to examine the possibility of recycling. “Recycling makes it easier not only to properly manage the family’s finances, but also for the self-employed, the cycle makes it possible to run the business in a more balanced way.”

So how do you do it? Here are some rules you should know:

Recycling is not only quality for the environment

Many Israelis stop being interested in their mortgage immediately after signing it. Only 20% of borrowers refinance their mortgage once every few years, and in most cases these are housing upgraders who purchase a new apartment and use the replacement to examine the existing mortgage as well. Moreover, Israelis usually return to their mortgages only during a crisis, as a result of which they can no longer afford repayments or desperately need redeployment.

Therefore, we recommend that you do not hesitate to recycle. In order to do this, the existing mortgage must be examined at least once a year in a process that is considered very simple: call the bank and ask for a report called the “Settlement Balances Report”, which includes the balances for disposal and details of the routes, the balance of the debt, interest rates and exit penalties, if any.

With this report, you can contact a mortgage adviser to examine all the data and check whether the track is suitable, how long it is suitable, and what is the potential savings in changing the mortgage plans or the amount of the monthly repayment.

Who should refinance a mortgage?

Most of us are reluctant to pick up the phone at the bank or go to the branch and wait. So, before you start the cycle process, here are three simple questions that will determine if you should even start the process:

Does the balance of the repayments on your mortgage exceed NIS 400,000?

Do you have more than five years left to make your mortgage payments?

Is the monthly fee too high?

If you answered all three questions in the affirmative, you should call the bank and ask for a clearance report. With proper refinancing, you can probably save more than 10% on your mortgage repayments.

When should I recycle?

If the reason for the refinancing is an improvement in the terms of the mortgage, in order for you to maximize the profit, it is worth checking the feasibility of refinancing it after a period of five years from the date of taking it. This recommendation stems from the fact that the Bank of Israel instructed the banks not to collect the full damage caused to them due to the turnover, meaning that the penalty for breaking the turnover after five years is paid in part and decreases over the years (in ten years it is less than six years).

If the consideration for which you want to refinance the mortgage is reducing the monthly payment, usually when refinancing you extend the repayment period. This can be combined with a change in the composition of the mortgage. If part of the refinanced mortgage will be variable rate, consider your ability or inability to withstand large changes in your monthly repayment, which is typical of repayments on such a mortgage.

In general, there is no breakage penalty (in turnover and repayment) when the mortgage track is based on variable interest and linked to the prime. In mortgages on this track, there are exit stations once every few years according to what is stipulated in the agreement, and at the exit station it is possible to switch tracks or stay on the track at a new interest rate, which can be higher or lower according to market conditions. The interest rate is usually affected by the average interest rate at the banks at the time of renewal and by the interest rate set by the Bank of Israel.

Where do you refinance a mortgage?

Most refinancers in Israel refinance the mortgage at the bank where they took the mortgage and therefore do not exhaust the potential savings inherent in the refinancing. If you’ve already decided to refinance, contact two other banks and ask for an offer. The other banks have a special interest in having the mortgage transferred to them, so they will make an effort to make a better and more worthy offer than the existing mortgage. Sometimes a certain track that works for you exists at one bank and does not exist at another. You can then go back to your bank and ask them for an offer, emphasizing that you already have offers from other banks, and all this is done free of charge. You can also contact an independent mortgage adviser, but it should be taken into account that his examination and recommendation have a cost that can reach several thousand shekels. Once you have several offers, examine which offer is best and most suitable for you and only then choose the right bank.

Did you take out a mortgage? Congratulations! Keep up to date with the news now

Most of us sign the mortgage and commit to it, as it is, until the end of our lives. But this is not a one-time deal. The mortgage is a dynamic and variable financial product, which is materially affected by changes in the interest rate in the economy, the consumer price index and, in some cases, the dollar exchange rate. The changes in each of these components can significantly change the amount of mortgage repayments, so it is very important to know what your mortgage mix is and what financial indicators affect it. From then on, it’s worth monitoring these metrics and understanding how they affect us. In this way, we will be able to prepare for the various changes in the mortgage, we will know how to avoid surprises and we will learn when we should refinance.

And finally: Caution, consultants ahead of you

Israelis are good people. They love to give advice, practical tips and help anyone. Every family member, friend and acquaintance will be happy to tell you about his amazing mortgage and connect you to his wonderful and nice bank clerk. As we already understood, the best mortgage for us is based on a mix that suits only us, our earning model today and in the future, our expenses and the degree of risk we are willing to take on. Therefore, the best advice you can give is: listen to the advice, say thank you and ask yourself all the questions that will give you a true picture of the mortgage that is just right for you.

The answer to this can be found with the help of an independent mortgage adviser or consultant at another bank, who can help with several important items:

• Ask the right questions and answer them
• Create your ideal mortgage mix
• Allow you to see how the mortgage will behave in different scenarios.

Pleasant and helpful recycling!