The 10-year mortgage is not as widely sought as 30-year or 15-year mortgages. A 10-year mortgage rate, however, can be lower than other options, saving you money.

To find out if a 10-year mortgage is right for you, do the math using a mortgage calculator.


10-year mortgage rate savings

If you’re considering refinancing, a 10-year mortgage rate could save you money compared to a longer-term mortgage.

10-year vs. 15-year refinance
10-year 15-year
Loan amount $100,000 $100,000
Interest rate 3.49% 3.59%
Loan term (months) 120 180
Monthly loan payment $988.39 $719.31
Total interest $18,606.84 $29,475.87
Total payments $118,606.84 $129,475.87

Here are a few pros and cons of getting a 10-year mortgage:

Pros:

  • Low rates. Not only is the term shorter, but 10-year mortgage rates also are typically lower — by as much as 1 percent — than 15- or 30-year mortgages.
  • Build equity fast. You will pay off the debt and build equity faster than you would with a longer-term mortgage (just 120 months versus 360 months for a 30-year loan).
  • Pay less interest. A 10-year mortgage can save you an eye-popping amount of money over a 30-year loan. Ten years of interest on a $250,000 loan at 4 percent is a little more than $53,000 — that’s 73 percent less in interest expense than the roughly $233,000 you would pay for 5 percent over 30 years.

Cons:

  • Higher monthly payments. Looking at a loan of $250,000, a 30-year mortgage at 5 percent will cost you $1,342 monthly in principal and interest. A 10-year mortgage rate at 4 percent, however, will cost $2,531 each month.
  • Financial situations can change. You might be able to afford the 10-year mortgage’s higher payments now, but that cost could be tough to pay if financial circumstances change. And the potential for default is something no one wants to face.

If you already own your home and are considering refinancing, you may want to consider a 10-year mortgage instead of more common options, including a fixed line of credit, particularly if you owe little on your current loan or if your house is paid off in full and you are seeking a second mortgage.