Blended rate calculator
When you add new money to an existing mortgage (portability, top-up, refinance with port), the lender blends old balance + new advance at a weighted-average rate. Compute it here.
Your scenario
Result
What blending and extending means
When you need new mortgage money mid-term — for a renovation, top-up, or to cover the gap in a portability move — you typically have two choices: break the mortgage (pay a penalty + take the new rate on the whole balance) or blend (keep your old rate on the existing balance + add new money at today's rate, weighted-averaged into a single rate).
Blending is structured by the lender and locked in. The math: blended rate = (old balance × old rate + new advance × new rate) ÷ total balance.
Two flavours of blend
- Blend and extend: blend the rates AND reset the term back to (e.g.) a new 5-year. Most common option offered by major banks.
- Blend to term: blend the rates but keep the remaining term unchanged. Less commonly offered — banks prefer to lock you in for another full term.
When blending is the right move
- You need an additional advance (e.g., refinance + renovation, port + top-up)
- Your old contract rate is well below current rates AND your IRD penalty for breaking would be significant — blending preserves the cheap part
- You're moving (porting) to a new home with a larger mortgage
- You want to lock in a longer rate horizon (blend and extend offers this benefit)
When blending is NOT the right move
- Your old rate is HIGHER than current rates — break the mortgage, take the new lower rate on the whole balance, eat the (probably small) 3-month-interest penalty
- You're close to renewal (within 6 months) — wait for the renewal date and start fresh
- The new lender is offering meaningfully better pricing or product features that justify breaking
- You don't actually need new money — there's nothing to blend with
Worked example
$420,000 existing mortgage at 3.49% (signed in 2021), need $180,000 of new money for a renovation. Today's rate: 5.04%.
- Blended rate: ($420k × 3.49% + $180k × 5.04%) ÷ $600k = 3.95%
- Vs breaking and rewriting at 5.04% on full $600k: 1.09 percentage points higher cost across the entire balance
- Difference per year: $600k × 1.09% = ~$6,500/year of savings from blending
- Plus you avoid the IRD penalty (likely $20-40k on a 2021 fixed mortgage)
Watch for these gotchas
- Some lenders only blend at the posted rate for the new portion, not the discounted rate they advertise to new applicants. Read the fine print.
- Blend and extend resets the term — you commit to a new full 5-year (or other) term, so you can't take advantage of falling rates as easily
- Switch lenders to blend isn't typical — blending is almost always with your existing lender
- Compare to alternative: a HELOC + keeping the existing first mortgage intact sometimes beats blending