15-year vs. 30-year mortgage: the case for each, honestly

The 15-year has better optics. Less interest, done sooner, more disciplined. It’s the answer that sounds like the grown-up one.

It’s also the wrong answer for plenty of people, and the reason has nothing to do with maths.

What the numbers do

On the same loan amount, a 15-year does two things: the payment goes up substantially, and the total interest goes down enormously. Both are large.

The payment increase is not double, which surprises people — you’re paying principal off far faster, so less of each payment is interest. But it’s a serious jump, and it’s the number that determines whether this works.

15-year rates are also typically a bit lower than 30-year rates, which widens the interest gap further in the 15’s favour.

So on pure lifetime cost, the 15-year wins. It isn’t close.

What the numbers don’t show

A 15-year mortgage is a commitment you cannot undo.

That’s the part the comparison tables leave out. Once you sign, that higher payment is mandatory every single month, in a year when your income drops, when the roof goes, when someone loses a job. Your lender will not care that you chose the responsible option.

A 30-year gives you a lower required payment — and nothing stops you paying it like a 15. If you take the 30 and voluntarily send extra principal each month, you get most of the interest saving with an escape hatch. In a bad year you simply stop sending extra. Nobody forecloses on you for declining to overpay.

That optionality is worth real money, and it’s invisible in a lifetime-interest comparison.

So when does the 15 actually make sense?

Your income is stable and comfortably absorbs the higher payment. Not “we could just about manage it.” Comfortably, with the emergency fund still intact afterwards.

You’re disciplined in theory but not in practice. This is a real argument and I’d never mock it. Plenty of people know they won’t send extra principal voluntarily. Forcing it structurally is a legitimate use of a mortgage.

You’re close to retirement and being mortgage-free by a specific date matters more than flexibility.

Rates are such that the 15 is meaningfully cheaper and the payment difference is small enough to be a rounding error in your budget.

When the 30 is the better call

Your income varies — self-employed, commission, bonus-heavy. Take the lower obligation and overpay in the good years.

You’d be draining reserves to make the payment work. A paid-off house and no savings is a bad place to be.

You have higher-interest debt, or an employer match you’re not maxing. Money going into extra principal at your mortgage rate is money not going somewhere returning more.

You’re not staying long. Most of the 15-year’s advantage accrues over decades. Sell in six years and you paid a much higher payment for a fraction of the benefit.

The version I usually end up recommending

Take the 30, then behave like it’s a 15 — set up an extra principal payment and forget it.

You’ll pay a slightly higher rate for the privilege, and that’s the cost of the escape hatch. Most people should buy the escape hatch.

The exception is the person who tells me honestly that they won’t do it. If that’s you, say so. Structure beats intention, and there’s no shame in knowing yourself.

Run it on your own numbers

The payment calculator will show you both terms side by side, including taxes and insurance so you’re looking at the real payment rather than principal and interest in isolation.

Then send me what you find. The right answer here depends on things a calculator can’t see — how steady your income is, what else you’re carrying, how long you’ll be in the house — and that’s a conversation, not a formula.