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On OpenSky, a reFinance, or "reFi" for short, refers to the process of a borrower often choosing to refinance when the interest-rate environment changes substantially or they have no enough money to full repay before the due date, causing potential savings on debt payments from a new agreement, such as Borrowers can easily switch from Instant loans to a Bespoke loan and from one Bespoke loan to another with better loan terms at any time using our innovative flash loan-enabled ReFinance function.
- A reFinance occurs when the terms of an existing loan, such as interest rates, payment schedules, or other terms, are marketed
- Borrowers tend to refinance when interest rates fall
- Refinancing involves the re-evaluation of a person or business’s credit and repayment status
- If the lender does not have enough funds to repay the loan in full, refinance can be used to repay the flash loan and generate new debt
NFT holders generally seek to refinance certain debt obligations in order to obtain more favorable borrowing terms, often in response to shifting economic conditions. Common goals from refinancing are to lower one's fixed interest rate to reduce payments over the life of the loan, to change the duration of the loan, or to switch from a fixed-rate mortgage to an adjustable-rate mortgage. In order to refinance, a borrower swaps their existing Instant loan for a new Bespoke loan offer from the Bespoke market or makes a new Bespoke loan offer for the lenders to consider. Flash loans are used to efficiently close out the old loan and open the new loan in a single blockchain transaction.
There are several types of refinancing options. The type of loan a borrower decides to get depends on the needs of the borrower. Some of these refinancing options include:
Instant loan to Instant loan: Borrowers can use their whitelisted NFTs to borrow 40% of the collection floor price instantly and need not worry about price-based liquidation at OpenSky. Borrowers can Refinance（aka extend) their loan before the due date or claim their NFT at any time by fully repaying the loan and interest due, but should pay attention to the loan due date.
Instant loan to Bespoke loan or Bespoke loan to Instant loan: If your NFT asset is part of the whitelisted Instant loan collections.
Bespoke loan to Bespoke loan: Can easily take advantage of better Bespoke loan offers without needing to collect the funds to pay off your current loan.
Other NFT lending protocol to OpenSky Instant loan or Bespoke loan: The reFinance function can be easily applied to move your existing loan at other NFT lending protocols to OpenSky to take advantage of better loan terms and to benefit from Discrete Time-based Liquidation (DBTL) at OpenSky.