Weighted Average Interest Rate Calculator
Instantly calculate the blended interest rate across multiple loans or debts
Loan Description (Optional)
Principal Balance ($)
Interest Rate (%)
Weighted Average Interest Rate
0.00%
Total Debt Balance
$0.00
Total Annual Interest
$0.00
Number of Loans
0
Results copied to clipboard!
Breakdown by Loan
| Description | Balance ($) | Rate (%) | Weight (%) | Annual Cost ($) |
|---|
What is a Weighted Average Interest Rate Calculator?
A weighted average interest rate calculator is a financial tool used to determine the overall interest rate on a portfolio of multiple debts or loans. Unlike a simple average, which treats all interest rates equally, a weighted average accounts for the size (principal balance) of each loan relative to the total debt.
This metric, often referred to as the "blended rate," is crucial for anyone managing multiple lines of credit. Whether you are a homeowner considering refinancing, a real estate investor with multiple mortgages, or a consumer looking at debt consolidation, understanding your weighted average interest rate allows you to make accurate mathematical comparisons against new loan offers.
For example, a large loan with a high interest rate will have a much bigger impact on your total costs than a small loan with a low rate. This calculator adjusts for those differences automatically.
Weighted Average Interest Rate Formula
The calculation relies on the proportion of each debt relative to the total debt load. The mathematical formula for the Weighted Average Interest Rate (WAIR) is:
WAIR = [ (B1 × R1) + (B2 × R2) + … + (Bn × Rn) ] / Total Balance
Where B represents the balance of a specific loan and R represents the interest rate of that loan.
| Variable | Meaning | Unit | Typical Range |
|---|---|---|---|
| Balance (B) | Outstanding principal amount | Currency ($) | $1,000 – $1M+ |
| Rate (R) | Annual interest rate | Percentage (%) | 2% – 30% |
| Weight | (Loan Balance / Total Balance) | Percentage (%) | 0% – 100% |
Practical Examples
Example 1: Mortgage Refinancing Decision
Imagine a homeowner has a primary mortgage and a Home Equity Line of Credit (HELOC). They want to know if refinancing into a single consolidated loan at 5.5% is a good deal.
- Loan A (Primary): $300,000 at 4.0%
- Loan B (HELOC): $50,000 at 9.0%
Using the weighted average interest rate calculator:
- Total Debt: $350,000
- Annual Interest: ($300k × 0.04) + ($50k × 0.09) = $12,000 + $4,500 = $16,500
- Weighted Average: $16,500 / $350,000 = 4.71%
Interpretation: The blended rate is 4.71%. Refinancing to a new loan at 5.5% would actually increase their interest costs, even though the HELOC rate (9%) seems high.
Example 2: Student Loan Consolidation
A graduate has three separate student loans:
- $10,000 at 3.5%
- $15,000 at 4.5%
- $25,000 at 6.8%
Result: Total debt is $50,000. The weighted average comes out to roughly 5.45%. If a private lender offers to consolidate these loans at 5.0%, the student would save money.
How to Use This Calculator
- Enter Loan Details: For each debt you carry, input the current principal balance and the interest rate. You can add a description (e.g., "Visa", "Mortgage") to keep track.
- Add More Rows: If you have more than the default number of loans, click "Add Another Loan" to generate more input fields.
- Review the Blended Rate: The large number at the top of the results is your weighted average. This is your "true" cost of borrowing.
- Analyze the Chart: The visual chart helps you see which loan contributes most to your total debt load.
- Copy Results: Use the "Copy Results Summary" button to save the data for your records or to share with a financial advisor.
Key Factors That Affect Results
When using a weighted average interest rate calculator, several economic and mathematical factors influence the outcome:
- Principal Balance Size: The largest loan dominates the calculation. A small credit card balance with a 25% APR might barely move the needle if you have a massive mortgage at 3%.
- Interest Rate Spread: The wider the gap between your lowest and highest rates, the more valuable this calculation becomes for consolidation decisions.
- Amortization Phase: Interest rates apply to the current balance. If a loan is nearly paid off, its impact on the weighted average diminishes significantly.
- Variable vs. Fixed Rates: This calculator provides a snapshot in time. If one of your loans has a variable rate, your weighted average will fluctuate as market indices change.
- Fees and Closing Costs: While the weighted average tells you the interest cost, it does not account for balance transfer fees or closing costs on a refinance. Always add these into your final decision.
- Tax Deductibility: Mortgage interest is often tax-deductible, whereas credit card interest is not. A 5% mortgage rate effectively costs less than a 5% personal loan rate after taxes are considered.
Frequently Asked Questions (FAQ)
Why is the weighted average different from the simple average?
A simple average adds the rates and divides by the number of loans, ignoring the loan size. The weighted average considers the balance, giving more "weight" to larger loans, which provides a more accurate reflection of actual interest costs.
Can I use this for investment portfolios?
Yes. You can use this tool to calculate the weighted average return on investment (ROI) by entering the invested amount as the "Balance" and the percentage return as the "Rate".
Does this calculator include fees?
No, this calculator strictly computes the weighted interest rate based on balances and nominal rates. It does not factor in origination fees, closing costs, or annual fees.
Should I always refinance if the new rate is lower than my weighted average?
Usually, yes, but not always. You must consider the transaction costs (closing fees) and the new loan term. Extending a loan term to lower the rate might result in paying more total interest over time.
How many loans can I add?
You can add as many loans as necessary using the "Add Another Loan" button. The calculation updates instantly.
Is the weighted average rate the same as APR?
Not exactly. APR (Annual Percentage Rate) includes fees and costs associated with obtaining the loan. The weighted average calculated here is based on the nominal interest rates of your existing debts.
How does a $0 balance affect the calculation?
Loans with a $0 balance are mathematically excluded from the weighted average because they have zero weight (0% of the total debt).
Can I calculate a blended rate for a second mortgage?
Absolutely. This is the primary use case for determining the blended rate of a first mortgage combined with a HELOC or second mortgage.
Related Tools and Internal Resources
Expand your financial toolkit with these related calculators designed to help you optimize your debt and savings strategy:
- Mortgage Calculator – Estimate monthly payments for new home loans.
- Debt Consolidation Calculator – See how much you can save by combining debts.
- Refinance Calculator – Determine the break-even point for refinancing costs.
- Amortization Schedule – View the detailed principal vs. interest breakdown over time.
- Investment Return Calculator – Project the growth of your portfolio over time.
- Compound Interest Calculator – Understand the power of compounding on savings or debt.
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function removeRow(id) {
var row = document.getElementById('row-' + id);
if (row) {
row.parentNode.removeChild(row);
calculateWAIR();
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function resetCalculator() {
var container = document.getElementById('rows-container');
container.innerHTML = ";
rowCount = 0;
addLoanRow();
addLoanRow();
addLoanRow();
calculateWAIR();
document.getElementById('copy-feedback').style.display = 'none';
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function formatMoney(num) {
return '$' + num.toFixed(2).replace(/\d(?=(\d{3})+\.)/g, '$&,');
}
function calculateWAIR() {
var totalBalance = 0;
var totalAnnualInterest = 0;
var activeLoans = 0;
var breakdownBody = document.querySelector('#breakdown-table tbody');
breakdownBody.innerHTML = "; // Clear table
var chartLabels = [];
var chartData = [];
var chartColors = ['#004a99', '#28a745', '#dc3545', '#ffc107', '#17a2b8', '#6610f2', '#e83e8c', '#fd7e14', '#20c997', '#6c757d'];
// Loop through all possible rows
var inputs = document.getElementById('rows-container').children;
for (var i = 0; i < inputs.length; i++) {
var rowId = inputs[i].id.split('-')[1]; // get number from 'row-X'
var balInput = document.getElementById('bal-' + rowId);
var rateInput = document.getElementById('rate-' + rowId);
var descInput = document.getElementById('desc-' + rowId);
var balance = parseFloat(balInput.value);
var rate = parseFloat(rateInput.value);
var desc = descInput.value || 'Loan ' + (i + 1);
// Validation display
document.getElementById('err-bal-' + rowId).style.display = (balance < 0) ? 'block' : 'none';
document.getElementById('err-rate-' + rowId).style.display = (rate 0) {
activeLoans++;
totalBalance += balance;
var annualInterest = balance * (rate / 100);
totalAnnualInterest += annualInterest;
// For chart
chartLabels.push(desc);
chartData.push(balance);
// For breakdown table (will update weights after total calc, so store data temporarily)
// Actually, let's just create the row here and update weights later or do a second pass?
// A second pass is better for weights.
}
}
// Second pass for table to calculate weights
var tableHTML = ";
var colorIndex = 0;
for (var j = 0; j 0) {
var weight = (b / totalBalance) * 100;
var cost = b * (r / 100);
tableHTML += '