The following factors will affect the amount of your interest payments:
The mortgage interest rate. This is the rate at which the bank charges you interest on the loan. Even a small difference in the interest rate can add up to thousands over the life of the loan.
The federal funds rate. The interest rate on your loan is loosely tied to the federal funds rate set by the Federal Reserve, which dictates the rate at which banks lend money to each other overnight. If you have a variable interest rate, paying attention to the federal funds rate can help you predict what your interest rate will do.
The amount you borrow. The more you borrow from your bank, the more interest you'll need to repay. For example, 5% of $1 million will always be a larger amount than 5% of $500,000.
The outstanding loan amount. As you gradually pay off the money you borrow, you will be paying interest on a smaller loan amount and your interest payments will slowly reduce.
The loan term. The time you take to pay off your loan will affect the amount of interest you pay — paying your loan off over a shorter period of time will minimize your interest.