Switch to 15 Year Mortgage Calculator
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Reviewed by Calculator Editorial Team
Switching from a 30-year mortgage to a 15-year mortgage can save you thousands of dollars in interest payments over the life of the loan. Use our calculator to determine exactly how much you could save by making the switch.
How to Use This Calculator
To use the Switch to 15 Year Mortgage Calculator, follow these simple steps:
- Enter your current home value or the amount you plan to borrow.
- Input your current 30-year mortgage interest rate.
- Enter the desired 15-year mortgage interest rate.
- Click the "Calculate" button to see your savings.
The calculator will show you the monthly payment difference, total interest paid over 15 years, and the total savings compared to a 30-year mortgage.
How the 15-Year Mortgage Works
A 15-year mortgage is a loan that is repaid over 15 years instead of the standard 30-year term. The shorter repayment period means you'll pay less interest over the life of the loan, but you'll also pay higher monthly payments.
The formula for calculating the monthly payment of a mortgage is:
Mortgage Payment Formula
M = P [ i(1 + i)^n ] / [ (1 + i)^n - 1 ]
Where:
- M = Monthly payment
- P = Principal loan amount
- i = Monthly interest rate (annual rate divided by 12)
- n = Number of payments (loan term in years × 12)
For a 15-year mortgage, n would be 180 (15 × 12), while for a 30-year mortgage, n would be 360 (30 × 12).
Benefits of a 15-Year Mortgage
Switching to a 15-year mortgage can offer several benefits:
- Lower interest costs: You'll pay less interest over the life of the loan.
- Faster loan payoff: You'll be debt-free in half the time of a 30-year mortgage.
- Potential tax benefits: You may qualify for mortgage interest deductions.
- Lower monthly payments: If you refinance, you might have lower monthly payments.
However, keep in mind that 15-year mortgages typically have higher interest rates than 30-year mortgages, so the trade-off is higher monthly payments for lower total interest.
30-Year vs. 15-Year Comparison
Here's a comparison of a 30-year mortgage and a 15-year mortgage with the same principal and interest rate:
| Term | Monthly Payment | Total Interest Paid | Total Cost |
|---|---|---|---|
| 30-Year | $1,200 | $240,000 | $720,000 |
| 15-Year | $2,400 | $180,000 | $660,000 |
In this example, the 15-year mortgage has higher monthly payments but lower total interest and total cost.
Frequently Asked Questions
Is a 15-year mortgage right for me?
A 15-year mortgage may be right for you if you want to pay off your mortgage faster, save on interest, and potentially qualify for tax benefits. However, the higher monthly payments may not be suitable if you have other financial obligations.
Can I switch from a 30-year to a 15-year mortgage?
Yes, you can refinance your 30-year mortgage to a 15-year mortgage. This process is called a "term change refinance." You'll need to qualify for the new loan and may need to pay closing costs.
What are the risks of a 15-year mortgage?
The main risks of a 15-year mortgage are the higher monthly payments and the shorter repayment period. If you can't make the payments or need to sell your home before the loan is paid off, you may owe more money than you would with a 30-year mortgage.