Total Mortgage Interest
Total interest paid over the life of a loan.
Formula
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Example
M=$1798, n=360, P=$300k: I ≈ $347k
How it works
This formula finds the total amount of interest paid on a fully amortizing loan by comparing the total of all monthly payments to the original amount borrowed. Since each payment includes both principal and interest, multiplying the monthly payment by the number of months gives the total cash paid, and subtracting the principal leaves only the interest portion. It assumes the payment stays constant for the whole loan term.
When to use it
Use this when you want to know the full interest cost of a fixed-rate mortgage or any loan with equal monthly payments. It is especially useful for comparing loan offers, estimating the long-term cost of borrowing, or checking how much extra you pay beyond the amount financed.
Worked example, step by step
Given: M = $1,250, n = 240 months, P = $220,000 Step 1: Multiply monthly payment by number of months M × n = 1,250 × 240 = 300,000 Step 2: Subtract the principal I = 300,000 - 220,000 Step 3: Compute total interest I = $80,000 Answer: The total mortgage interest paid over the life of the loan is $80,000.
Common mistakes to avoid
- Using the interest rate instead of the monthly payment in the formula
- Forgetting to multiply by the total number of months in the loan term
- Subtracting the monthly payment once instead of subtracting the original principal once
Did You Know?
On a 30-year loan you can pay more in interest than the original price of the house.
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