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Refinancing a 30-year mortgage into a 15-year: the payment jump, the interest saved, and the prepay alternative

By DecisionSheet · Updated · 2026 tax figures

Trading a 30-year mortgage for a 15-year does two things at once: it lowers the rate, because 15-year money is cheaper, and it forces a much higher payment, because the balance is repaid in half the time. The interest saved is large and easy to state. Whether the trade is worth it depends on what the extra payment would otherwise have earned, which is what the mortgage refinance break-even calculator measures. This page works one example, then compares it with the cheaper-sounding alternative of keeping the 30-year and paying it as if it were a 15.

The example

What the 15-year costs and saves

The payment jumps by $593.63, from $2,407.35 to $3,000.98. In return, interest from today to payoff falls from $429,982 to $190,176, a saving of $239,806, or $233,806 after closing costs.

Calculator verdict for refinancing a $350,000 balance at 7% with 27 years left into a 15-year loan at 6.25% for $6,000: break-even month 27 with cash earning 4%, and after 10 years the refinance ends +$36,443 ahead.

The interest figure overstates the gain in one way: the extra $593.63 a month is money the borrower could have invested. With it earning 4%, the refinance is ahead from month 27 (2 years 3 months), is +$9,958 ahead after 5 years, +$36,443 after 10 and +$192,144 once both loans are gone. Counting interest alone, with no return on cash, the break-even is month 23.

At 8%, a stock-market assumption, the picture tightens: ahead from month 34 (2 years 10 months), +$12,527 after 10 years and +$15,436 at the end, because the invested payment difference is doing more work on the keep side. Over 10 years the two paths tie when cash earns 9.76% a year. Above that, keeping the 30-year and investing the difference wins; below it, the 15-year does. Open the 8% scenario.

That number is the whole decision. A 6.25% loan repaid faster is a guaranteed 6.25% return on every extra dollar, and a bit more here because the cut from 7.00% applies to the full balance. An investment has to beat 9.76%, before tax, every year, to do better. The same comparison for a prepayment on an existing loan is in Pay off a 3% mortgage or a 7% mortgage early?.

Keep the 30-year and pay it like a 15?

The usual objection is that a 15-year mortgage locks in the higher payment, and a borrower can get the same result by prepaying the 30-year, with the option to stop. The calculator's companion, the mortgage payoff vs. invest calculator, runs that: $593.63 a month extra on the old loan at 7.00%.

Monthly payment Paid off in Interest to payoff
Keep the old loan, scheduled payments $2,407.35 27 years $429,982
Keep the old loan, pay $3,000.98 $3,000.98 16 years 5 months $238,432
Refinance to 15 years at 6.25% $3,000.98 15 years $190,176 + $6,000 costs

Prepaying works, but at 7.00% the same payment takes 16 years 5 months to clear the loan rather than 15 years, and costs $42,256 more interest than the refinance even after its $6,000 of closing costs. The flexibility is real, and so is its price: it is the rate difference, paid on the whole balance for as long as it is owed. Open the prepay scenario.

The refinance's 15-year rate is lower partly because the lender takes less duration risk. A borrower who might need to drop back to the lower payment is choosing between that option and about $42,256 of interest, in this example.

Held-to-the-end table: keeping the old loan pays it off in 27 years with $429,982 of interest; the 15-year refinance at $3,000.98 a month is paid off in 15 years with $190,176 of interest and ends +$192,144 ahead with cash earning 4%.

The 30-year refinance with the payment kept

A third route: refinance to a new 30-year at 6.50%, which lowers the scheduled payment to $2,212.24, and keep paying the old $2,407.35. Paid on schedule, that 30-year costs $446,406 of interest, +$16,424 against the old loan, because the clock resets to 30 years; Mortgage refinance break-even covers the reset. With the old payment kept, it is paid off in 23 years 11 months with $340,247 of interest and is +$13,965 ahead of the old loan after 10 years. That is better than the old loan and worse than the 15-year, by $150,071 of interest, again because of the rate. Open the kept-payment 30-year scenario · the scheduled-payment 30-year scenario.

Assumptions and limits

Method and sources

The refinance figures come from calculateRefinance in the mortgage refinance break-even calculator; the prepay row from calculateMortgage in the mortgage payoff vs. invest calculator, which the data file checks against the refinance model's figures for the old loan. Both amortize month by month with the standard fixed-rate payment formula. The refinance's lead at a month is every cash difference to that month, closing costs included, grown at the return, plus the old loan's balance minus the new one's. The tie return is the return on cash at which that lead is zero at the stay, found by bisection.

Open this scenario in the calculator

All figures on this page come from the Mortgage Refinance Break-Even calculator. Change any input there and the numbers update.

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