Refinancing is the process of replacing an existing loan with a new one, typically to secure better financial terms. The new loan pays off the old debt and introduces changes such as lower interest rates, revised repayment periods, or different loan types.
People or businesses choose refinancing to reduce borrowing costs, lower monthly payments, shorten or extend loan tenure, or convert between fixed and variable interest rates. It can also provide access to additional funds through equity-based refinancing.
In essence, refinancing helps borrowers improve cash flow, reduce interest burden, or restructure debt to match current financial needs.