# Rescheduling and Refinancing Loans
Source: https://docs.mambu.com/docs/rescheduling-and-refinancing-loans
:::note Payment Holidays
If you are looking for information on setting up payment holidays to help your clients through any difficulties, please see our dedicated [Payment Holiday](/docs/working-with-payment-holidays) page.
:::
There might be several reasons that require rescheduling or refinancing a loan, such as unexpected events like a natural disaster that prevent the client from keeping up with the repayments, or as part of a negotiation with the client. Or you may have a client who has been making timely repayments and might just need more principal, which would require you to refinance or top-up a loan. This section explains both features and how to use them.
## Rescheduling
This option allows you to keep the same principal balance or reduce it, but create a new schedule for the loan and, if needed, different loan terms.
When a loan account is rescheduled, you can redefine all the loan terms that were available when the loan was created, including the loan product, and also change the custom field values or the guarantees.
When rescheduling a loan account, the Loan Amount will be filled in with the original account principal balance and you can adjust that amount by selecting the **Reduce Amount** box. If you reduce the amount, part of the principal remaining will be written off.
By default, any interest, fees, or penalties will be capitalized or written off on the new account and not transferred from the old one:
* You can write off balances, completely or partially, by adjusting the amounts in the **Outstanding Balances** section.
* Disbursement fees - deducted, capitalized, or upfront - will not be displayed in the reschedule form.
* The only fees transferred from the old account to the new one are Late Repayments and Payment Due fees.
Both the original and the newly created accounts will have a transfer transaction logged, to show the amount of principal that was rescheduled.
:::note
When rescheduling a loan, the previous loan account will then be closed and replaced by the new account. You can provide the new loan account ID via API. As the ID has to be unique, we suggest adding v2 or #2 or A, B, C, or any other prefix or suffix that helps with matching; otherwise, the newly created loan account will be given a default ID that will not help you match the two loan accounts. For more information, see our related [API documentation](/api/api-v2/loans/reschedule)
:::
## Refinancing
This option enables transferring the principal balance plus some additional amount to a new loan account, with new terms.
Loan refinancing allows you to set the **Top Up Amount** that should be added to the refinanced principal and change the Loan product for the new loan (if applicable).
By default, any interest, fees, or penalties will be capitalized or written off on the new account and not transferred from the old one:
* You can write off balances, completely or partially, by adjusting the amounts in the **Outstanding Balances** section.
* Disbursement fees - deducted, capitalized, or upfront - are available in the **Refinancing Loan Account** form to select and save and the same fees would also be available at disbursement.
* You can preview the schedule with fees in the refinancing form.
* The fees that are required on the product will become optional. The only fees that are transferred from the old account to the new one are Late Repayments Fees and Payment Due Fees.
The new loan account will be in **Partially Disbursed** account sub-state and you will need to disburse the top-up amount, in a Disbursement transaction. No other transactions can be posted on the account until the top-up amount is disbursed.
When **Refinancing** a loan account, the fees that were marked as **Required** when the Loan Product was defined will become **Optional** and can be applied on the Refinanced loan account at disbursement.
:::note
The options to select fees during refinance and preview the schedule with fees are only available for **Dynamic loans** and **Tranched loans**.
:::
## How to reschedule or refinance a loan account
To reschedule or refinance a loan, you need the `Reschedule/Refinance Loan Account` permission, as well as the permission to `Create Loan Accounts`.
To reschedule or refinance a loan account, open the account and select **Close** > **Reschedule** or **Refinance**.
:::warning Please Be Aware
The **Reschedule** and **Refinance** options are only visible when it is possible to perform those actions on an account. The options are removed from the menu when:
- the account principal balance is 0
- the account is locked
- the account is partially disbursed
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## Filling out the form
### Loan product
By default, the new loan account is created under the same loan product like the original account, but you choose a different loan product if necessary.
### Keep the same account ID
When you reschedule or refinance a loan, you can choose whether to keep the same account ID for the new loan. To keep it, select the **Keep same account ID** checkbox.
:::note
After refinancing or rescheduling a loan, the account ID of the refinanced or the rescheduled loan is the same as the account ID of the original loan. However, the account ID of the original loan, which is closed, will be updated with a new ID which will depend on whether the product settings have incremental or random ID generation. For more information, see [Setting up new loan products - New account settings](/docs/setting-up-new-loan-products#new-account-settings).
:::
#### Example
Consider an exmaple where you have a loan product with random ID generation settings consisting of four letters and three digits.
You create a new loan and the ID MADI459 is automatically generated. Then you reschedule or refinance the loan and you select the **Keep the same ID** checkbox. The new account will have the same account ID MADI459 and the ID of the old account will be updated to, for example, ABCD123. If you reschedule or refinance the account with the ID MADI459 again and you select the **Keep the same ID** checkbox, then again, the active refinanced or rescheduled account will have the ID MADI459 and the old account, which is closed, will be updated to a new ID, for example, WXYZ123.
To get the details and transactions of all the versions of the account, use the [get details of previous versions](/api/api-v2/loans/get-versions-by-id) and the [get transactions for all versions](/api/api-v2/loans_transactions/get-transactions-for-all-versions) endpoints in our API 2.0.
### Outstanding balances
The default amounts are 0 but you can specify the amount of interest, fees, and penalties to be capitalized on the new account.
### Account terms
#### Loan amount
By default, the amount displayed here corresponds to the principal that was still due in the loan you're now rescheduling or refinancing.
#### Interest rate
By default, this will be the same interest rate that was being applied to the previous account, but it can be changed according the selected loan product.
### Disbursement details
Enter the disbursement and first repayment date of the new loan.
### Schedule preview
After entering the new terms you can see how the repayment schedule will look like by just selecting **Preview Schedule**.
### Association
By default, the new loan is associated to the same branch as the initial loan.
### Account notes
Add all the information you consider relevant about the rescheduled or refinanced loan.
:::warning Please Be Aware
If you are rescheduling into the same loan product of the original account, the rescheduled or the refinanced loan will need to comply with the currently applicable loan product rules. If the original loan parameters differ from the current loan product settings (for example, the interest rate that the loan had before is higher than currently applicable, you will receive an error message and won't be able to reschedule / refinance.
:::
When a new loan account is created at rescheduling or refinancing, the old loan account's custom field values are copied to the new loan account. This is the equivalent of adding those custom field values to the account, and therefore the user performing the reschedule or the refinance operation must have permission to edit all the applicable custom field values.
## Undo a reschedule or a refinance
If you rescheduled or refinanced a loan under wrong loan terms or by accident, you can undo this action.
To do so:
1. Open the account.
2. On the right-hand side of the screen, select **More** > **Undo Reschedule** or **Undo Refinance**.
3. Confirm by selecting **Close**.
Mambu will reactivate the original account and change the state of the new account to `Closed (Withdrawn)`. For audit purposes, the Transfer transactions are kept on both accounts, but these transactions will be reversed.