Repaying 250,000 at 6% a year over 30 years instead of 15 lowers the monthly payment from 2,109.64 to 1,498.88 and adds 159,859 in interest: 289,595 in total against 129,736.
A longer term means smaller payments, but the balance falls more slowly, so interest is charged on more money for longer. Over 30 years the interest comes to more than the loan itself.
Four terms side by side
The same loan and the same rate in every row:
| Term (years) | Monthly payment | Total interest | Total repaid |
|---|---|---|---|
| 15 | 2,109.64 | 129,736 | 379,736 |
| 20 | 1,791.08 | 179,859 | 429,859 |
| 25 | 1,610.75 | 233,226 | 483,226 |
| 30 | 1,498.88 | 289,595 | 539,595 |
What the example leaves out
The rate is the same for every term here; a lender may charge a different rate for a different term. Fees are left out, and a rate that changes during the loan changes every row.