Blended Interest Rate Calculator
Combine two loans into a single balance-weighted blended interest rate — the true average rate you actually pay.
How it works
Blended rate = (balance₁ × rate₁ + balance₂ × rate₂) ÷ (balance₁ + balance₂)
A blended rate weights each loan by its balance, not a simple average of the two rates — a large low-rate loan dominates a small high-rate one. It is the benchmark for a consolidation decision: only a consolidation loan priced below your blended rate actually lowers your interest cost, before fees.
Worked example
A $250,000 first mortgage at 4% and a $60,000 second at 8.5% blend to (250,000×4 + 60,000×8.5) ÷ 310,000 = 4.87%. Despite the 8.5% second loan, the big low-rate first keeps the blend under 5%.
Frequently asked questions
Why not just average the two rates?
A plain average ignores balance size. Averaging 4% and 8.5% gives 6.25%, but if most of the money sits in the 4% loan the true blended rate is far lower — here 4.87%.
How does a blended rate guide consolidation?
It is your break-even rate. A consolidation or refinance loan only saves interest if its rate is below the blended rate, and you must still weigh closing costs and term changes.
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Educational estimate, not financial advice. Confirm figures with your lender or a licensed professional.