It makes sense when your priority is improving monthly cash flow and you can recoup the penalty cost through lower payments within a reasonable timeframe, especially if you are in a variable-rate mortgage, facing a high-rate renewal, or paying a high rate with a private or alternative lender.
Divide the penalty cost by your monthly savings to find how many months it will take to break even. If that timeframe is shorter than your remaining term, the move is financially worthwhile; if not, you must decide if the monthly cash flow is worth the extra cost.
Graduating your mortgage means using debt restructuring strategies and improving your credit score to move from a high-interest private or alternative lender back to a major bank that offers a much lower interest rate.
Yes, through strategic debt restructuring and credit score improvement, it is possible to switch from an expensive private or alternative mortgage to a cheaper bank rate, which is something the Streetwise Mortgages team helps clients do regularly.
