It's a shame to recycle after you've paid most of the interest.

Here's a secret you already know: every seller wants to sell their goods at a high price.

The merchant's costs are at their lowest possible level after he has streamlined as much as he can. Now, the higher the price he can sell his goods for, the wealthier he will become.

It seems I haven't taught anyone much in the first paragraph. Why is it that when we talk about a shoe salesman or a falafel vendor, the sentence above seems natural, but when we talk about a bank, people think there's a different life principle at play? Well, there isn't. A bank is a dealer in money and wants to get the most money for the money it sells. It's a bit confusing to say they sell us money and we pay with money, but if we think about mortgages and interest, we'll discover that's exactly what's happening: we receive (buy) a large sum of money when taking out a mortgage, and then each month we repay a portion of the debt and pay interest on the part we haven't repaid.

In other words, we can say that every month we buy an amount of money equal to the debt and pay interest on it of, say, 3%/12 = 0.0025 of our debt. If we have a debt of 100,000 shekels. We can say that we bought 100,000 shekels at a price of 0.0025*100,000 = 250 shekels. The following month, the debt will be, say, 99,000 shekels, which we bought for 0.0025*99,000 = 247.5 shekels, and so on until the loan is paid off.

It's a shame to recycle after paying most of the interest

This is a phrase bankers love to say to customers who come in asking if they should refinance their mortgage. Sometimes I have no choice but to be blunt. This phrase is total bullshit. Let’s say you took out a loan of 700,000 shekels and paid 4% interest on it for 10 years. You already understand that you’re "buying" your current debt every month at a rate of 4% (annual interest)/12 (months in a year). If I offer you a refinancing deal where you’d pay 21% per year instead of 41% starting now, does it matter how much you’ve already paid, or does it matter how much less you’ll pay from now on? Obviously, what matters is Only how much you can save in the future. The fact that you have paid X shekels to date has no economic significance.

Wait, wait, but with a Spitzer, you pay more interest at the beginning and less interest out of the monthly payment later on. This is a correct statement but completely unrelated to the advisability of recycling. When the monthly payment is fixed, as in a non-graduated loan, the ratio between principal repayment and interest payment in the monthly installment shifts over the years. When the debt is high, the majority of the monthly payment is interest, and when the debt is lower, the majority of the monthly payment is principal. Still, if we refinance and reduce the annual interest rate while maintaining the same monthly payment amount, we will pay less money in terms of total payments to the bank.

But my banker actually told me not to refinance because of the high penalty. Oh well, you know merchants, they always want you to pay a lot for their goods. I already described the refinancing penalty issue in the article about Mortgage Refinancing.

And a final point, when assessing the feasibility of refinancing at the bank, the banker uses unrealistic assumptions: a zero inflation rate and interest rates that will always remain at their current level. Therefore, even for a loan with a hundred percent variable repayments, the banker will not say it's worthwhile to refinance because the loan is risky.

So many biases in the banker's "advice." Perhaps he's not the right advisor for you.

In summary

a. Interest paid in the past has no meaning. It is always worthwhile to refinance in order to reduce future payments. 
b. The recycling examination should also address future changes in the prime rate, index, and long-term interest rates ( variable every 5 years as an example). 
C. A refinancing review must also address the risks of the current loan and not just whether it is being saved or not.