Mortgage Term and Total Interest Expense
Edited by
Harry Jensen, Trusted Mortgage Expert with 45+ Years of Experience
Updated November 2, 2018
The amount of total interest expense you pay over the life of the mortgage is directly related to the term of the mortgage
- The longer the mortgage term, the more you pay in total interest expense over the life of the mortgage
So even though a mortgage with a shorter term has a higher monthly payment than a mortgage with a longer term, you end up paying much less in total interest expense with a mortgage that has a shorter term
- We offer a detailed explanation of "What Length of Mortgage Should I Choose?" that reviews how mortgage term impacts total interest expense over the life of a mortgage and helps you select the length of mortgage that is right for you
Example: Mortgage Term and Total Interest Expense
The chart below compares the monthly mortgage payment and total interest expense over the life of the mortgage for $400,000 fixed rate mortgages with a 4.0% interest rate and 10, 15, 20, 25, 30 and 40 year terms
- As demonstrated by the chart, the shorter the mortgage term, the higher the monthly payment but the lower the total interest expense over the life of the mortgage
- Selecting a shorter mortgage term can save you tens of thousands and even hundreds of thousands of dollars in interest expense over the life of the mortgage. That means less money for the bank and more money for you
One creative way to think about mortgage term is to get a mortgage with a longer term but make the same payment that you would with a shorter term mortgage, so a higher mortgage payment than what is required
- That way you maintain the flexibility of having a lower required monthly mortgage payment that goes along with a longer mortgage term (in case you cannot afford to make the higher payment), but you pay off your mortgage faster and potentially save hundreds of thousands of dollars in interest expense
Use our
FIXED RATE MORTGAGE CALCULATOR to compare the monthly mortgage payments and total interest expense are for fixed rate mortgages with various terms
About the authorMichael Jensen, Mortgage and Finance Guru
Michael is the co-founder of FREEandCLEAR. Michael possesses extensive knowledge about mortgages and finance and has been writing about mortgages for nearly a decade. His work has been featured in leading national and industry publications. More about Michael
Total Interest Expense Comparison
- Total Interest Expense
- Monthly Mortgage Payment
Total Interest Over the Term of the Mortgage
Monthly Mortgage Payment
$500,000 $5,000
$375,000 $3,750
$250,000 $2,500
$125,000 $1,250
$0 $0
10 Years $85,977 $4,050
15 Years $132,575 $2,959
20 Years $181,741$2,424
25 Years $233,405 $2,111
30 Years $287,478
$1,910
40 Years $402,440
$1,672
Mortgage Term
%
Current Mortgage Rates in Ashburn, Virginia as of March 29, 2024
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Rate data provided by RateUpdate.com. Displayed by ICB, a division of Mortgage Research Center, NMLS #1907, Equal Housing Opportunity. Payments do not include taxes or insurance premiums. Actual payments will be greater with taxes and insurance included. Read through our
lender table disclaimer for more information on rates and product details.
About the authorMichael Jensen, Mortgage and Finance Guru
Michael is the co-founder of FREEandCLEAR. Michael possesses extensive knowledge about mortgages and finance and has been writing about mortgages for nearly a decade. His work has been featured in leading national and industry publications. More about Michael