For many the answer may be yes.
But the cost of refinancing can outweigh the benefit if you don’t do the maths.
Research from Canstar, reported by news.com.au, shows that on average, Aussies are paying $803 in refinancing costs, this includes discharge fees, loan applications, valuations and legal and settlement costs.
But it may be possible to recoup this in the first year alone if your loan meets a few key aspects.
Firstly, if your loan is under an 80% loan to value ratio (LVR) then it’s worth shopping around.
If your LVR is above this, you’ll likely incur lenders’ mortgage insurance when you refinance and your costs could skyrocket.
“Unfortunately a break-even analysis for homeowners whose loan is over 80 per cent of the value of their property would more than likely show that the costs outweigh the benefits of refinancing,” says Canstar editor-at-large Effie Zahos.
But for those below the 80% LVR with a $500,000 loan, an interest rate just 0.21% less than you’re paying now will put $804 back in your pocket within 12 months – covering the average costs of refinancing.
And it also pays to shop around for lenders offering cash back deals – just make sure the interest rate is as attractive as the cash back.
If you’re thinking of refinancing, it can pay to get independent financial advice or see an independent mortgage broker to make sure the numbers add up in your favour.
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