Blended Mortgage Rate Calculator Canada
The blended mortgage rate calculator shows the rate when you add new money to a Canadian mortgage, the new monthly payment and how it compares with refinancing.
What it does
This calculator works out the blended rate a lender charges when you add new money to an existing mortgage instead of breaking it, and shows what the larger balance costs each month at that blended rate.
Data sources & parameters
This calculator uses standard financial formulas and runs entirely in your browser. It needs no external rate data — your result is computed only from the values you enter above.
We always strive to use the latest data for every variable so our results and reports are as accurate as possible. Even so, errors are possible — you should not rely on this tool or its report alone, and we accept no liability for any decision made based on it.
The formula
blended rate = (existing balance * existing rate + new money * new rate) / (existing balance + new money); monthly payment = P * i / (1 - (1 + i)^-n) where i = (1 + blended rate / 2)^(1/6) - 1 and n = amortization months
How it works
It weights the rate already in force by the balance still outstanding, weights the rate offered on the new money by the amount you are borrowing, and averages the two. It then amortizes the combined balance using the Canadian semi-annual compounding convention to give the new payment.
Where it is used
- Pricing a blend-and-extend before you accept the lender's offer
- Comparing a blend against refinancing the whole balance at the new rate
- Seeing how much the monthly payment rises when you take new money
Worked example
Adding CA$100,000.00 at 5.19% to a CA$350,000.00 balance at 2.79% gives a blended rate of …, a payment of … a month against … today, and undercuts by … the rate you would pay on the whole … at the new rate.
What the blended mortgage rate calculator does
When you need more money part way through a mortgage term and would rather not break the contract, a lender can merge what you already owe with the new borrowing and charge one average rate on the combined balance. That average is the blended rate, and this calculator works it out so you can judge whether the offer is worth taking.
You enter the balance still outstanding, the rate on it, the amount of new money and the rate quoted on it. An advanced field sets the amortization used for the payment. The tool returns the blended rate, the balance after the blend, the payment at the blended rate, your current payment, the payment if the whole balance took the new rate, and the rate you save by blending rather than refinancing everything.
Why the weighting matters more than the rates
A blend is weighted by dollars. The rate you end up with sits between the two inputs, but much closer to whichever balance is larger. A borrower with $350,000 left at 2.79% who takes $100,000 of new money at 5.19% does not land halfway, at 3.99%. The old balance is three and a half times the new money, so the blend lands at about 3.32%.
That is why blending appeals to anyone still holding a rate from a cheaper period. The cheap money is diluted in proportion to how much new borrowing you do, and borrowing half as much dilutes the old rate half as far. If the amount you need is flexible, run two or three amounts through the calculator to see what each extra dollar of borrowing does to the blended rate.
Blending against breaking
The alternative is breaking the mortgage and refinancing the whole balance at today’s rate. The calculator shows that as the payment if the whole balance took the new rate, and the gap between it and the blended payment is the monthly benefit of blending. With the example figures, $2,666 against $2,205, the difference is about $461 a month for the rest of the amortization.
Against that sits the one-time cost of breaking, which on a fixed-rate mortgage is usually the greater of three months’ interest and the interest rate differential. When your existing rate is far below current rates, the interest rate differential can run to tens of thousands of dollars, and blending wins. When your existing rate is close to the market, the penalty shrinks toward three months’ interest, and moving the whole balance to a new lender may beat a blend, especially if that lender covers your legal and appraisal costs.
What the calculator does not price
A blend quote is not always the clean average the arithmetic implies. Some lenders price the new money at their posted rate, some at a discounted rate close to what a new client would get, and some add a premium because they know you are unlikely to leave mid-term. Compare the rate offered on the new money with the rate the same lender advertises publicly. If it is clearly higher, there is room to negotiate.
New money that increases the registered charge on the property can also bring an appraisal fee, a title update or legal costs. These are usually far smaller than a prepayment penalty, and the calculator leaves them out. It also keeps the amortization unchanged, whereas some blend offers extend it, which lowers the payment while raising the lifetime interest.
Blend to term and blend and extend change the rate you will be offered rather than the arithmetic. Blend to term prices the new money over the months left on the current term. Blend and extend gives a fresh full term at a rate priced for it, often a slightly higher blended result in exchange for a longer fixed period.
Using the results
Start with the offer as quoted and check that the blended rate sits between the two rates and leans toward the larger balance. Then look at the payment increase. It often surprises borrowers, because the balance rises by a much larger percentage than the rate, and the payment follows the balance. Know that number before you commit.
Then compare the blended payment with the payment on the whole balance at the new rate. A large gap means the blend is saving you real money. A small gap means your existing rate is close to the market, and you have little to lose by shopping the whole balance elsewhere.
Every figure here is an estimate for comparison based on the numbers you enter, not a mortgage quote or financial advice. Your lender calculates the binding blended rate and payment, including any fees and rate premium, so confirm the final terms in writing before you sign.
About This Tool: Blended Mortgage Rate
Blended mortgage rate: use this tool to get an instant estimate based on the figures you enter. Adjust the inputs above to match your situation, or browse all our calculators to plan your next step.
Frequently asked questions
How is a blended mortgage rate calculated?
What is the difference between blend and extend and blend to term?
Is blending better than breaking the mortgage?
Does blending avoid the prepayment penalty?
Why does my payment rise even though the rate barely moves?
Which compounding does the payment use?
About the author
