We just helped this client a few weeks ago:

Current mortgage balance: $300,000
Interest rate: 3.49% 5 years, 2 years left in his term
Penalty to break the mortgage early: $4,600
23-year amortization, payments of $1,578.48 per month.

He was also carrying 3 credit cards with balance of $2,000, $5,000 and $16,000, with min payments of $60, $150, and $420 respectively.
Making just the minimum payment it would take 30 years to pay off which means about 90% of these payment goes towards interest.
As well he had a $15,000 line of credit at 6% interest = $75 per month interest payment.

So when we looked at his numbers:

Over the next 2 years, he pays $20,180 interest and $17,673.22 principal on his mortgage.

Over the next 2 years, he pays about $13,608 interest and $1,512 principal on his credit cards

Over the next 2 years, he pays $1,800 interest and $0 principal on the line of credit.

(The credit card numbers are close but not exact, as he slowly pays down the credit cards he pays a bit less interest)
Total over the next 2 years: $35,588 Interest and $19,185.22 principal

And his total monthly payments are: $2,283.48
We refinanced his mortgage into a 2.59% 5 year fixed rate. The new mortgage includes the penalty, the credit cards and the line of credit.

Scenario #1: Keeping his new mortgage payments the same as he is currently paying, reduces the amortization on his mortgage to 15 years and 1 month.

This means over the next 2 years he pays $16,685.97 interest and $38,172.99 Principal.

We have to account for the penalty on his mortgage of $4,600. This means in 2 years he is $14,387.77 ahead after the penalty!
Scenario #2: Wants to reduce his payments but keep the principal amount being paid down the same.

We reduced the amortization to 22 years which dropped his payments to $1,701.38 per month.
And now over the next 2 years, he pays $17,046.71 interest and $23,762.89 Principal less the penalty of $4,600, which means $19,162.89 principal paid.

He saves $582.10 per month or $13,970.40 over the next 2 years!
Scenario #3: Wants to reduce his monthly payments by as much as possible.

We increased his amortization to 30 years which dropped his payments to $1,367.28 per month.

Over the next 2 years he pays $17,252.41 interest and $15,543.47 principal – the penalty of $4,600 = $10,943.47 principal paid.
He saves $916.20 per month or $21,988.80 over the next 2 years on his payments!

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