Blended Rate Mortgage Calculator
Weighted-average rate across multiple loans.
Calculate the blended (weighted-average) interest rate across two mortgage loans of different balances and rates. Free and educational.
What this tool does
This calculator computes the blended interest rate across two separate loans by weighting each loan's rate according to its balance relative to total debt. Enter both loan balances and their corresponding interest rates to see the effective rate you're paying in aggregate. The result represents a single average rate that describes your combined borrowing cost across both loans. The blended rate is driven primarily by whichever loan carries the larger balance—a bigger loan at a higher rate will pull the average upward more significantly than a smaller loan. This calculation is useful when consolidating debt or comparing the true cost of holding multiple loans simultaneously. The calculator assumes both loans have equal remaining terms; if repayment periods differ materially, the blended rate serves as an educational illustration rather than a precise reflection of total interest paid over time. The tool does not account for fees, variable rates, or changes in balance over time.
Quick answer: with the default values, the result is 3.80% (Blended Rate). Adjust the values below for your own figures.
Enter Values
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Formula Used
Disclaimer
Results are estimates for educational purposes only. They do not constitute financial advice. Consult a qualified professional before making financial decisions.
Blended rate is what you are effectively paying when you hold two loans. 200,000 at 3% plus 50,000 at 7% is not 5% — the larger low-rate loan dominates. Actual blended rate is 3.80%. This is the figure often used when comparing against a single refinance offer.
A worked example
With the defaults: loan 1 balance of 200,000, loan 1 rate of 3%, loan 2 balance of 50,000, loan 2 rate of 7%. The tool returns 3.80%.
What moves the number most
The result responds to Loan 1 Balance, Loan 1 Rate, Loan 2 Balance, and Loan 2 Rate.
The formula behind this
Weighted average of the two rates by balance. The simple version ignores differing remaining terms; the comparison is cleanest when both loans have similar terms.
Why this matters
A mortgage is usually the biggest single financial commitment a person makes. Over the full term, the gap between different rates and structures can add up across total interest paid. Modelling the numbers ahead of a decision shows how sensitive the outcome is to the rate and structure chosen.
Why it is weighted, not averaged
A blended rate is the single rate that would cost the same as the loans held, weighted by balance rather than averaged. At the defaults, 200,000 at 3% alongside 50,000 at 7% blends to 3.8%, not the 5% a simple average suggests, because the larger balance carries four fifths of the weight.
What the blend does not capture
The number is most useful when comparing a consolidation offer against what is already held, since a rate that looks lower than the highest loan can still be higher than the blend. It assumes both balances are outstanding over the same period, so it drifts as the loans amortise at different speeds. It also ignores fees, term differences, and any rate that is fixed on one loan and variable on the other, each of which can matter more than the fraction of a point the blend reveals.
Blending your loans at 3% and 7% produces a weighted-average rate of 3.80%.
Inputs
| Total Debt | $250,000.00 |
|---|---|
| Loan 1 Weight | 80.00% |
| Loan 2 Weight | 20.00% |
| Rate Spread | 4.00% |
This example uses typical values for illustration. Adjust the inputs above to match a specific situation and see how the result changes.
Sources & Methodology
Methodology
This calculator computes a weighted-average interest rate across two loans. It multiplies each loan's balance by its interest rate, sums those products, then divides by the total balance. The result represents the single blended rate that would produce equivalent total interest charges if applied uniformly across the combined loan amount. The model assumes both loans have equal remaining terms and that interest accrues at a constant rate with no fees, prepayment penalties, or adjustments. It does not account for differing loan durations, varying payment schedules, compounding frequency differences, or the actual sequence of payments over time. The blended rate serves as a simplified comparison tool rather than a precise prediction of future payments.
References
Frequently Asked Questions
When is this useful?
Does term length matter?
Is blended rate the same as APR?
Can I use this for more than 2 loans?
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