Choosing between a 15-year and a 30-year mortgage is a trade between monthly cash flow and lifetime interest. The 15-year loan costs noticeably more each month, usually at a lower rate, and finishes with far less interest paid. This calculator prices both terms side by side so you can see exactly what the shorter term buys you.
15 vs 30 year mortgage: a worked example
On a 340,000 loan at 5.6% over 15 years, the payment is roughly 2,795 a month and total interest comes to about 163,000.
The same 340,000 over 30 years at 6.3% costs about 2,105 a month — some 690 less — but total interest is roughly 418,000.
The shorter term costs around 690 more each month and saves roughly 255,000 in interest. Change the loan size and the two rates above to see the numbers for the deal actually in front of you.
Why the shorter term usually has a lower rate
Lenders price a 15-year loan below a 30-year one because they get their money back sooner and carry less risk. The gap is commonly around half a point to a full point.
That rate difference is a real part of the saving, so compare the two quotes you were actually given rather than assuming the same rate on both terms. Using one rate for both understates how much the shorter term saves.
The 30-year with overpayments option
A third option sits between the two: take the 30-year loan for its lower required payment, then overpay towards a 15-year schedule voluntarily. You keep the flexibility to drop back to the smaller payment if income falls.
The cost of that flexibility is the higher 30-year rate, which applies to the whole balance. The mortgage overpayment calculator shows how much of the 15-year saving you can recover this way.
Which term to choose
Choose the 15-year term if the higher payment fits comfortably alongside a funded emergency buffer and retirement contributions, and you value being mortgage-free sooner.
Choose the 30-year term if the extra monthly commitment would crowd out savings or leave no margin for a job change, a new baby, or a rate shock at renewal. A cheaper mandatory payment is itself a form of insurance.
Whatever the interest comparison says, a payment you cannot sustain for fifteen straight years is not the cheaper option.
Frequently asked questions
- Is a 15-year or 30-year mortgage better?
- A 15-year mortgage costs far less interest overall and is typically offered at a lower rate; a 30-year mortgage costs much less each month and leaves more room in your budget. The right choice depends on whether the higher payment fits comfortably for the full fifteen years.
- How much do you save with a 15-year mortgage?
- On a 340,000 loan at 5.6% versus 30 years at 6.3%, the shorter term saves roughly 255,000 in interest while costing around 690 more per month. Enter your own loan amount and quoted rates above for your figures.
- Why is the rate lower on a 15-year mortgage?
- The lender is repaid sooner and takes on less interest-rate and default risk over the life of the loan, so shorter terms are usually priced around half a point to a full point below 30-year terms.
- Is it better to take a 30-year mortgage and pay it off early?
- It is a reasonable middle path: you get the lower required payment as a safety net and can overpay to shorten the term. You pay the higher 30-year rate for that flexibility, so it recovers most, but not all, of the 15-year saving.
- What monthly payment difference should I expect between 15 and 30 years?
- Typically the 15-year payment is 30–50% higher than the 30-year payment on the same balance, even after allowing for the lower rate, because the principal is repaid in half the time.