Total interest? A $300,000 mortgage at 6.5% over 30 years costs approximately $384,000 in total interest. The total interest amount depends on your loan amount, interest rate, and loan term. Making extra principal payments can dramatically reduce total interest.
How Total Interest Is Calculated
Total interest is the sum of all interest payments over the life of the loan. With a traditional amortizing mortgage, each payment includes both principal and interest. Early payments are mostly interest. Later payments are mostly principal. Over 30 years, the total interest on a $300,000 loan at 6.5% is about $384,000, meaning you would pay back roughly $684,000 total.
The interest rate has the biggest impact. A 1% lower rate on that same $300,000 loan saves about $60,000 in interest over 30 years. A shorter term like 15 years saves even more because the loan is paid off faster and the rate is typically lower.
Impact of Extra Payments
Making extra principal payments reduces the total interest significantly. Adding $100 per month to your payment on a $300,000 loan at 6.5% saves roughly $50,000 in interest and pays the loan off about 4 years early. Even one extra payment per year makes a meaningful difference.
Patrick Kevin Fagan recommends using a mortgage amortization calculator to model the impact of extra payments. Every dollar of extra principal you pay today saves you the interest on that dollar for the remaining loan term.
