This is the rate that results from the blending of an existing mortgage and a new mortgage with differing interest rates into one consolidated mortgage.

The calculation to determine the final blended rate takes into account both the interest rates and the amount of principal for each of the component loans.

Often, a lender will offer a blended rate if the borrower chooses to break his/her mortgage early and refinance. Beware that such blended rates often include a penalty built in. A mortgage planner can calculate if it makes more sense to pay the whole penalty and refinance elsewhere at a lower rate. It often does.

Partial Source: CAAMP