Mortgage Interest Calculator

The number lenders do not advertise

Borrow $320,000 at 6.5% for 30 years and your monthly principal-and-interest is a manageable $2,023. The lifetime interest bill: $408,143 — you repay $728,143 for a $320,000 loan. Stretch or shrink the term and watch what happens: at 15 years (even at the same rate) total interest falls to about $182,000; the term matters as much as the rate.

How interest is charged each month

That single line explains everything: interest is highest when the balance is, so early payments are mostly interest, and anything that shrinks the balance early — a bigger down payment, extra principal, a shorter term — cuts interest for every month that follows. In year one of the example loan, $20,600 of your $24,271 in payments is interest. In the final year, under $700 is.

Five levers that cut total interest

1. Shorter term — the biggest lever of all; compare in the 15 vs 30 calculator.
2. Lower rate — shop lenders; 0.5% on $320,000 is worth about $37,000 over 30 years.
3. Extra principal — $200 a month saves about $109,000 here; model it in the payoff calculator.
4. Bigger down payment — interest is never charged on money you never borrowed.
5. Biweekly payments — the 13th-payment effect saves roughly $118,000 on this loan; see the biweekly calculator.

For the payment itself use the payment calculator; for the full month-by-month schedule, the amortization calculator.