Refinancing is the process of obtaining a new debt facility to replace an existing one. This involves paying off the current facility with the proceeds from the new one, which typically has different terms, such as a different interest rate, duration, or amount.
The objective of refinancing is not limited to but can include, obtaining a lower interest rate, adjusting the length of the loan term, or changing the type of loan.
Refinancing can be suitable for a variety of situations, but its appropriateness largely depends on specific financial goals, current financial health, and market conditions. Here are some scenarios where refinancing might be suitable:
Items to consider:
Refinancing for better terms is not always the right thing to do and taking into account more than just cost is, we think, important to making the right decision.