Should You Pay Points when Refinancing?

If you are looking at a remortgage, you may be asked to pay points on the loan. When refinancing, you will need to consider whether or not paying points is in your best interest. Here are a few things to consider about whether or not you should pay points when refinancing.

Interest Rate

One of the benefits that you will receive by paying points is that you can lower your interest rate. The objective when paying points is to buy down your interest rate. This means that the more money that you are willing to pay in points, the lower your interest rate on the loan can be. If getting a cheaper monthly payment is important to you, points could be very beneficial.


When you pay mortgage points, you will be able to deduct the amount that you pay from your taxable income. You can deduct the amount of mortgage interest that you pay as well as the points when filing your taxes.

Cash on Hand

Even though there are 2 financial benefits that you can receive by paying points, it may not make sense for everyone. If you do not have the amount of cash on hand that is necessary to pay the points, then it would not make much sense to do so.