Blend and Extend Mortgage Calculator
When rates fall mid-term, your lender may offer to blend your current rate with today's into a new, longer term, with no penalty. This calculator works out that blended rate and whether it beats the two alternatives: riding out your term, or breaking the mortgage and paying the penalty.
For a new term of this length
Estimated: the larger of 3 months' interest and the rate differential
Blended rate
4.77%
5.49% for the 24 months left, 4.29% for the other 36, over a new 5-year term.
Interest and penalty over the next 5 years
Blending costs the least over the next 5 years: $701 less than waiting and $631 less than breaking, with no penalty and one payment from now on.
Interest plus any penalty over the same 5 years, each option starting from today's balance; the ending balances differ by only what each option repaid. Lenders blend in different ways, and some add the penalty into the blended rate: ask for the figure in writing.
The Three Options Side by Side
| Option | Rate | Monthly payment | Interest over 5 years | Penalty | Total cost | Balance after 5 years |
|---|---|---|---|---|---|---|
| Wait for the renewal | 5.49% then 4.29% | $2,996.44 then $2,724.93 | $99,090 | — | $99,090 | $379,078 |
| Blend and extendcheapest | 4.77% blended | $2,818.63 | $98,389 | — | $98,389 | $379,271 |
| Break and refinance | 4.29% | $2,703.06 | $88,220 | $10,800 | $99,020 | $376,036 |
The penalty estimate is the larger of three months' interest ($6,176) and the interest rate differential on the months left ($10,800), the way our penalty estimator works it out. Waiting assumes the renewal comes at the lender's rate today; if rates move before then, so does that option.
What Blend and Extend Is
A blend and extend replaces the rest of your current term with a new full term, usually five years, at a rate between your old one and the lender's current one. The blend is weighted by time: your old rate counts for the months it had left to run, the new rate for the months added. On a mortgage with two years left at 5.49% and a new 5-year rate of 4.29%, the blended rate is about 4.77%: two-fifths of the way from the new rate to the old one. There is no penalty, because the lender collects the difference through the blended rate instead; some lenders also fold the penalty itself into the blend, which pushes the rate higher. A blend to term is the smaller cousin: a blended rate for the months left only, without extending, used when you are taking more money out rather than chasing a lower rate.
How to Compare the Three Options
The fair comparison is over the same stretch of time: the length of the new term. Waiting means paying your current rate until the renewal and the new rate after it; blending means the blended rate for the whole new term; breaking means the new rate for the whole term plus the penalty, which for a fixed-rate mortgage is the greater of three months' interest and the interest rate differential, and can be far larger when the lender uses its posted rate (our penalty estimator explains the two). The calculator adds up the interest each option costs over those years, plus any penalty, from the same starting balance. Blending usually lands between the other two: cheaper than breaking because there is no penalty, dearer than waiting because the old rate still applies to the months it had left, in a different form. It wins when the extension itself is worth something to you: certainty about the rate for five years rather than two, in exchange for a rate that is often a little above what you could get by waiting.
What to Check Before You Agree
Ask the lender for the blended rate in writing and for how it was calculated, and ask whether the penalty is in it. Compare the new rate it blends with against the market: a blend is only ever with your own lender's rate, and a renewal is the one moment you can switch lenders without a penalty, so a blended rate should be measured against the best rate you could get elsewhere at renewal, not the lender's own (our renewal comparison calculator does that sum). Blending resets the term, so a move or a refinance within the new five years brings a new penalty. If rates are expected to keep falling, blending now locks in part of today's rate for longer; if they are expected to rise, it locks in the old, higher rate for longer too.
Today's Mortgage Rates from Lenders
This calculator works with whatever rate you enter. Compare it with the rates lenders are offering right now, fixed and variable, by term. Change the price, down payment or location to match your purchase.
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