Blend & Extend Calculator

What the Blend & Extend Calculator does

When a lender offers to "blend" your rate — combining your existing rate with a new one instead of charging a prepayment penalty — the offer usually arrives as a single number with no way to check whether it is fair. This calculator rebuilds that blended rate from its actual components, checks it against today's market rate for the same term, and tells you whether a penalty appears to have been folded into it.

It also puts blending in context against the two alternatives borrowers rarely think to compare it with: porting your existing rate to a new property, and simply breaking the mortgage outright and starting fresh. All four paths are priced on the same basis so the comparison is genuinely apples to apples.

• Your true blended rate, calculated both without and with an extension into a new term
• The implied embedded penalty — the dollar cost hidden inside a blended rate above market
• A four-way comparison: blend, blend and extend, port, and break outright
• The typical port window between selling and buying
• Which option produces the lowest total cost on your numbers

The key variables that move the answer — and how lenders treat them

A blended rate is a weighted average, and weighted averages are only as trustworthy as the weights used to build them — which is exactly where a lender has room to be generous with itself.

• Months remaining vs the new term length — a blend without extending weights your existing rate by balance; a blend and extend instead weights it by time, splitting the new term between your remaining months at the old rate and the extension months at the new rate. A longer new term hands more weight to the new-money rate, which usually pushes the blended figure up.
• The market rate for comparison — this is the number that exposes whether a penalty is embedded. If your blended rate sits meaningfully above what you could get elsewhere for the same term length, the difference is functionally a penalty, just paid through the rate over time instead of upfront in cash.
• Rate on new money — set independently by the lender and not always disclosed clearly. A blend-to-increase can look attractive on the blended number alone while the new-money portion is priced well above what the same lender would offer a fresh application.
• Port window — typically 30 to 120 days between the sale of your current property and the purchase of the new one, and it varies meaningfully by lender. Miss the window and porting is off the table regardless of how favourable the rate would have been.

How this is actually calculated

A blend without extending is a straightforward weighted average by dollar amount: your existing balance at your existing rate, plus any new money at its own rate, divided by the combined balance. It does not touch your term — it just changes what you pay on the same balance for however long is left.

A blend and extend instead re-weights by time over a full new term: your existing rate is weighted by the months remaining in your current term, and the new rate is weighted by the extension months needed to reach the new term length, with the total divided by the new term in months. The implied embedded penalty is then calculated as the gap between that blended rate and today's market rate for the same term, multiplied by the balance and the term length — a rough dollar equivalent of the penalty a straight break would have cost.

Porting carries the existing rate forward on the ported amount, blending only the increase, if any, using the same weighted-average logic as a blend without extending. Breaking outright uses the same interest-rate-differential penalty methodology as the penalty calculator, added to a fully new mortgage priced at the current market rate.

• Blend, no extend: (balance × current rate + new money × new-money rate) ÷ (balance + new money)
• Blend and extend: (current rate × months remaining + new-money rate × extension months) ÷ new term in months
• Implied embedded penalty: (blended rate − market rate) × balance × term
• Break outright: penalty (three months' interest or IRD, whichever is greater) + new mortgage at market rate

What you get from this calculator, and how to use it in a negotiation

A lender offering a blend has no obligation to show you the math behind it, and most borrowers accept the single number they are given. Rebuilding the blend yourself changes that conversation from accepting an offer to being able to question one.

• Implied embedded penalty — the single most useful figure here, and the one to bring back to your lender if the gap looks large
• Four-way comparison — shows whether blending, porting or simply breaking and starting over actually produces the lowest cost for your numbers
• Blended rate, both methods — lets you check the lender's quoted number against an independent calculation
• Port window — a hard deadline worth diarising the moment porting becomes a live option

Using your results well

If the implied embedded penalty is large relative to what a straight break would cost, ask the lender directly whether the blended rate includes a penalty component and request the underlying calculation. Not every lender will disclose it in detail, but the question itself is a reasonable one and a broker can often get a clearer answer than a borrower calling in alone.

This calculator does not know your lender's specific blend policy, which varies significantly — some lenders blend generously with no hidden cost, others do not offer blending at all, and the exact weighting formula differs between institutions. Treat every figure here as a benchmark to compare an actual offer against, not a substitute for the offer itself.

• Ask your lender directly whether the blended rate includes a penalty component
• Compare the blend against porting and against breaking outright before accepting either
• Confirm the exact port window with your lender if a move is even a possibility
• Bring the implied embedded penalty figure into any renegotiation of the offer

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