Hi,
I am doing some finance calculations about how much more a 30 yrs mortgage costs you over a 15 yrs mortgage. This example takes into account the principle that one dollar today is worthier than one dollar tomorrow.
My example is in an amount of 250k and take the assumption of a 5% fixed interest for the 30 years.
Summary of the two mortgages:
15yrs - monthly rpymt = [FONT="]1,976.98 eur[/FONT]
30 yrs - monthly rpymt = [FONT="]1,342.05 eur[/FONT]
15yrs - annual rpymt = [FONT="][FONT="]23,723.76 [/FONT] eur[/FONT]
30 yrs - annual rpymt = [FONT="][FONT="]16,104.60 [/FONT] eur[/FONT]
Annual difference = [FONT="]7,619.16 eur
[/FONT]15yrs - total rpymt = [FONT="][FONT="]355,856.40 [/FONT] eur[/FONT]
30 yrs - total rpymt = [FONT="][FONT="]483,138.00 [/FONT]eur[/FONT]
Total difference = [FONT="][FONT="]127,281.60 [/FONT] eur[/FONT]
So now I took the annual extra 7.6k cash and put it in a deposit which pays a 3% APR; compounded it for 30 years. I also did the same with the 23,723 eur, which you will not need to pay any longer once the 15 yrs mortgage has been paid off, and again put in a 3% APR; compounded it for 15 years.
These are the amounts which I got:
15 yrs = 454,473.25 eur
30 yrs = 373,359.25 eur
Finally, I calculated the Net Present Values for those above amounts using a 5% opportunity cost (30 years).
15 yrs = 105,154.86 eur
30 yrs = 86,386.91 eur
Difference = 18,767.95 eur
So if my calculations are correct, 18k eur are the real savings between a 15 yrs vs 30 yrs mortgage. This amount is based on the assumption stated in my above example.
I am open to correction. I’d love to know if I have got it right.
I am doing some finance calculations about how much more a 30 yrs mortgage costs you over a 15 yrs mortgage. This example takes into account the principle that one dollar today is worthier than one dollar tomorrow.
My example is in an amount of 250k and take the assumption of a 5% fixed interest for the 30 years.
Summary of the two mortgages:
15yrs - monthly rpymt = [FONT="]1,976.98 eur[/FONT]
30 yrs - monthly rpymt = [FONT="]1,342.05 eur[/FONT]
15yrs - annual rpymt = [FONT="][FONT="]23,723.76 [/FONT] eur[/FONT]
30 yrs - annual rpymt = [FONT="][FONT="]16,104.60 [/FONT] eur[/FONT]
Annual difference = [FONT="]7,619.16 eur
[/FONT]15yrs - total rpymt = [FONT="][FONT="]355,856.40 [/FONT] eur[/FONT]
30 yrs - total rpymt = [FONT="][FONT="]483,138.00 [/FONT]eur[/FONT]
Total difference = [FONT="][FONT="]127,281.60 [/FONT] eur[/FONT]
So now I took the annual extra 7.6k cash and put it in a deposit which pays a 3% APR; compounded it for 30 years. I also did the same with the 23,723 eur, which you will not need to pay any longer once the 15 yrs mortgage has been paid off, and again put in a 3% APR; compounded it for 15 years.
These are the amounts which I got:
15 yrs = 454,473.25 eur
30 yrs = 373,359.25 eur
Finally, I calculated the Net Present Values for those above amounts using a 5% opportunity cost (30 years).
15 yrs = 105,154.86 eur
30 yrs = 86,386.91 eur
Difference = 18,767.95 eur
So if my calculations are correct, 18k eur are the real savings between a 15 yrs vs 30 yrs mortgage. This amount is based on the assumption stated in my above example.
I am open to correction. I’d love to know if I have got it right.