Blended rate
A single rate that combines your existing mortgage rate with the lender's current rate on new money (or on a new term), weighted by the amounts involved. Lenders offer it when you add funds mid-term or port to a bigger mortgage, so you avoid a full prepayment penalty.
A blend lets you borrow more (or change your term) without breaking the mortgage outright. The lender weights your existing rate and its current rate by the old balance and the new money, so the blended rate lands between the two. Some lenders also weight by the time left in the term, and some build part of the penalty into the blended rate, so ask to see the calculation.
There are two common versions: blend-and-extend resets you to a fresh full term, while blend-to-term keeps your existing maturity date. Extending is common when you are also pulling equity; keeping the term suits a smaller top-up.
Blending is often cheaper than breaking, but not always. Sometimes paying the penalty and moving to another lender wins, so compare both before signing the lender's blend offer. Federally regulated lenders must explain how any prepayment charge is calculated.
Worked example
Illustrative (balance-weighted blend): $300,000 remaining at 3.00%, plus $100,000 of new money at an assumed 4.50%.
($300,000 × 3.00% + $100,000 × 4.50%) ÷ $400,000 = ($9,000 + $4,500) ÷ $400,000 = 3.375% blended on the full $400,000.
Illustrative figures only, rounded; not a quote or current rate. See today’s rates on our live board.
Sources
- Breaking your mortgage contract (Financial Consumer Agency of Canada)
- Mortgage fees: Prepayment penalties (Financial Consumer Agency of Canada)
See also
Ask Maya about Blended rate
Instant answers · 50+ languages · no credit pull