Refinancing - what is it in simple words
Posted: Wed Feb 19, 2025 5:53 am
Refinancing is the acquisition of a new credit product to close one or more existing loans. The procedure allows the borrower to conclude an agreement on more favorable terms, consolidate debt and optimize payments, extend the loan term, thereby reducing the amount of monthly payments.
You can refinance existing loans in the same bank or in another financial and credit institution. When drawing up a new agreement, the original debt is repaid in full before the established deadline, and a new payment schedule is drawn up for newly arisen obligations. You can refinance any credit products, except for loans from microfinance organizations that operate without a license.
Refinancing objectives
The reasons why a borrower decides to refinance existing debt uk mobile database obligations may vary, but they have one thing in common - the new agreement must be more beneficial to the debtor than the current one. Otherwise, refinancing simply loses its meaning.
Unlike a regular loan, when refinancing, the borrower does not receive cash in hand or on a bank card. The entire amount under the new agreement is used to pay off existing credit obligations, including the principal and interest accrued by the time of repayment. Why is refinancing carried out?
The main goals of refinancing are to improve credit conditions and reduce the debt burden. Secondary goals may include transferring servicing to a more convenient bank, changing the loan term, and preventing debt growth.
You can refinance existing loans in the same bank or in another financial and credit institution. When drawing up a new agreement, the original debt is repaid in full before the established deadline, and a new payment schedule is drawn up for newly arisen obligations. You can refinance any credit products, except for loans from microfinance organizations that operate without a license.
Refinancing objectives
The reasons why a borrower decides to refinance existing debt uk mobile database obligations may vary, but they have one thing in common - the new agreement must be more beneficial to the debtor than the current one. Otherwise, refinancing simply loses its meaning.
Unlike a regular loan, when refinancing, the borrower does not receive cash in hand or on a bank card. The entire amount under the new agreement is used to pay off existing credit obligations, including the principal and interest accrued by the time of repayment. Why is refinancing carried out?
The main goals of refinancing are to improve credit conditions and reduce the debt burden. Secondary goals may include transferring servicing to a more convenient bank, changing the loan term, and preventing debt growth.