Refinancing refers to applying for a secured loan intended to replace an existing loan secured by the same assets. The most common refinancing is for Home Mortgage .Refinancing may be undertaken to pay off other debts, to reduce one’s periodic payment obligations or to liquidate some or all of the equity that has accumulated in real property during the tenure of ownership.

Some refinanced loans, while having lower initial payments, may result in larger total interest costs over the life period of the loan, or expose the borrower to greater risks than the existing loan. Some loans contain penalty clauses triggered by an early payment of the loan, either in its totality or a specified part.