* This calculation uses a weighted average of the loan amounts. Your specific lender (e.g., RBC, TD, Scotiabank) may apply "Blend to Term" logic which also factors in remaining time.
function calculateBlendedRate() {
// 1. Get Inputs
var existingBalance = parseFloat(document.getElementById('existingBalance').value);
var existingRate = parseFloat(document.getElementById('existingRate').value);
var newMoney = parseFloat(document.getElementById('newMoney').value);
var newRate = parseFloat(document.getElementById('newRate').value);
// 2. Validation
if (isNaN(existingBalance) || isNaN(existingRate) || isNaN(newMoney) || isNaN(newRate)) {
alert("Please fill in all fields with valid numbers.");
return;
}
if (existingBalance < 0 || existingRate < 0 || newMoney < 0 || newRate < 0) {
alert("Values cannot be negative.");
return;
}
// 3. Calculation Logic (Weighted Average)
// Formula: ((Balance * Rate) + (NewMoney * NewRate)) / (Balance + NewMoney)
var totalPrincipal = existingBalance + newMoney;
var weightedExisting = existingBalance * existingRate;
var weightedNew = newMoney * newRate;
var blendedRate = (weightedExisting + weightedNew) / totalPrincipal;
// Calculate Interest Savings (Annual Approximation)
// Cost if whole loan was at new market rate:
var costAtMarketRate = totalPrincipal * (newRate / 100);
// Cost at blended rate:
var costAtBlendedRate = totalPrincipal * (blendedRate / 100);
var annualSavings = costAtMarketRate – costAtBlendedRate;
// 4. Display Results
document.getElementById('blendedRateResult').innerHTML = blendedRate.toFixed(3) + "%";
// Format Currency
var formatter = new Intl.NumberFormat('en-CA', {
style: 'currency',
currency: 'CAD',
minimumFractionDigits: 2
});
document.getElementById('totalPrincipalResult').innerHTML = formatter.format(totalPrincipal);
document.getElementById('interestSavingsResult').innerHTML = formatter.format(annualSavings) + " / year";
// Show container
document.getElementById('results').style.display = "block";
}
Understanding Blended Mortgage Rates in Canada
In the Canadian real estate market, homeowners often find themselves needing to access the equity in their homes before their current mortgage term has expired. Whether for home renovations, debt consolidation, or purchasing a second property, adding funds to an existing mortgage requires a recalculation of your interest rate. This is where a Blended Rate Calculator becomes essential.
What is a "Blend and Extend"?
The "Blend and Extend" option allows you to break your current mortgage contract early without paying the typically steep prepayment penalties. Instead of breaking the term completely to get current market rates on the entire balance, your lender blends your existing low interest rate with the current (usually higher) market rate on the additional funds.
The result is a weighted average interest rate that is somewhere between your old rate and the new market rate. This is often more financially advantageous than refinancing the entire mortgage at today's higher rates.
How is the Blended Rate Calculated?
Canadian banks typically use a weighted average formula based on the loan amounts. The logic follows these steps:
Step 1: Calculate the annual interest cost of your current balance at your current rate.
Step 2: Calculate the annual interest cost of the new/additional money at the current market rate.
Step 3: Add these two interest costs together.
Step 4: Divide the total interest cost by the total new mortgage amount (Existing Balance + New Money).
Example Scenario
Imagine you have $300,000 remaining on your mortgage at a fixed rate of 2.50%. You want to borrow an additional $50,000 for renovations, but current rates have risen to 5.50%.
If you refinanced the whole $350,000 at 5.50%, your interest costs would skyrocket. By using a blended rate, your new rate might settle around 2.93% (depending on exact weighting), keeping your payments significantly lower than a full refinance.
Blend to Term vs. Blend and Extend
It is important to note that different lenders in Canada (such as TD, RBC, CIBC, BMO, and Scotiabank) may offer two variations:
Blend to Term: You keep your current maturity date (the date your term ends). The rate is blended, but the time remaining does not change.
Blend and Extend: You extend your mortgage term (usually back to a full 5-year term). The rate is blended to account for the new money and the longer duration.
This calculator provides an estimate based on the weighted average of the principal amounts, which is the primary factor in determining your financial efficiency when adding funds to a mortgage.
{
"@context": "https://schema.org",
"@type": "FAQPage",
"mainEntity": [{
"@type": "Question",
"name": "What is a blended mortgage rate?",
"acceptedAnswer": {
"@type": "Answer",
"text": "A blended mortgage rate is a weighted average interest rate that combines your existing mortgage rate with a new, usually higher, current market rate. This allows you to borrow more money or extend your term without losing the benefit of your existing low rate entirely."
}
}, {
"@type": "Question",
"name": "How do I calculate a blended rate?",
"acceptedAnswer": {
"@type": "Answer",
"text": "To calculate a blended rate, multiply your current balance by your current rate, and your additional funds by the new market rate. Add these two results together, and then divide by the total total loan amount (Current Balance + Additional Funds)."
}
}, {
"@type": "Question",
"name": "Is a blended rate better than refinancing?",
"acceptedAnswer": {
"@type": "Answer",
"text": "Generally, yes. If your current fixed rate is lower than the current market rate, blending is usually cheaper than breaking your mortgage and refinancing the entire amount at the new higher rate, as it avoids prepayment penalties and keeps a portion of your debt at the lower historical rate."
}
}]
}