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A blended rate calculator is a tool that helps you calculate the average blended interest rate of multiple mortgages, debts, loans, or any other amortizations you might have. The blended rate is the weighted average of the interest rates of two or more amortizations combined into one single balance. These amortizations could have the same or different interest rates, but they all should have the same payment period. You can use their blended rate to simplify the computation of interest or compare this blended rate to the interest rate of a single payment plan that another lender might offer.

To calculate the blended rate, you need to sum up all the interests of each amortization concerned and divide this sum by the total of the balances (the money you owe) for the payment period you consider. You can express it in equation form, as shown below:

blended rate = sum of all the interests / total balance

where sum of all the interests is the sum of all the interests for the period; and total balance is the total of all the balances for the period.

Here is how you can use the blended rate calculator:

• Start by entering the balances, interest rates, and payment periods of each amortization you want to combine.
• The calculator will then compute the blended rate for you.
• You can also use the calculator to compare the blended rate with the interest rate of a single payment plan that another lender might offer.

Here is an example of how to use the blended rate calculator:

Suppose you have two mortgages with the following details:

• Mortgage 1: $100,000 at 2.5% interest rate
• Mortgage 2: $20,000 at 4% interest rate

To calculate the equivalent blended rate of this offer, you can use the blended rate calculator. The blended rate would be:

blended rate = ($100,000 * 2.5% + $20,000 * 4%) / ($100,000 + $20,000) blended rate = ($2,500 + $800)) / $120,000 blended rate = 0.02583333 or 2.58%

Therefore, the blended rate for these two mortgages is 2.58%.

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