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Should I blend and extend my mortgage?

Your lender offered to blend your rate instead of charging a penalty? Compare it with keeping your mortgage and with breaking it, over the same period.

Your fixed-rate mortgage today

Balance owing

Your current fixed rate

Example value. Enter the rate on your mortgage.

Months left in your term

Years left on your amortization

The blend and the new term

New term length after the blend

A blend-and-extend replaces your current term with a new, longer one. Must be at least the months you have left.

Rate available today for the new term

Example value. The rate you could get if you broke and took a new mortgage for this term.

Blended rate your lender quoted (optional)

Leave blank to use an approximation. Lenders set their own blended rate and it is often higher.

Rate you expect when your current term ends

Needed for the keep option, because the new term runs past your maturity. An assumption: nobody knows future rates.

If you break instead

Penalty

Penalty quoted by your lender

Lender's current rate for a term close to your time left

Example value. Used for an IRD estimate (current-rate method). If your lender uses posted rates the penalty may be much higher; get a quote.

Legal, discharge, appraisal and other costs of breaking

Example value. Some new lenders cover legal and appraisal costs. Enter what you would actually pay.

Add the penalty and costs to the new mortgageUnticked means you pay them in cash today.

More options

Your lender's rate for the new term, used in the blend (optional)

Leave blank to use the rate available today. Lenders often blend with their own posted or current rate.

Fee your lender charges for the blend

Some lenders charge an admin fee. Treated as paid in cash.

Your estimate

What this calculator answers

A blend-and-extend lets you get a lower rate without paying a penalty. Your lender combines what is left of your current rate with today's rate for a new, longer term, and you start that new term now. It sounds like a free lunch, but you give up the chance to shop other lenders, and the blended rate is set by your lender, not by a formula you can check.

This calculator compares three paths over the same new term: keep your mortgage and renew at maturity, blend and extend, or break, pay the penalty and take today's rate.

How the calculation works

The approximate blended rate is a time-weighted average: your rate for the months left in your term, and the new term rate for the rest of the new term. If your lender gave you a rate, that is used instead.
For each option: total cost = upfront cash + every payment over the new term + the balance still owed at the end.
Keeping your mortgage uses your current rate until maturity and the renewal rate you expect after that.
Breaking uses the penalty (estimated with the current-rate IRD, or your lender's quote) and your other costs, either added to the new mortgage or paid in cash.
Fixed-rate interest is compounded semi-annually, payments are monthly, and every option keeps the same amortization.

Assumptions and limits

Blended rates are lender policy. Some lenders blend with a posted rate, weight by balance and time, or add a margin. Your quote is the number that counts.
The renewal rate for the keep option is an assumption. Try a higher and a lower value to see how sensitive the answer is.
The IRD estimate uses the current-rate method. Lenders that use posted rates minus your discount can charge a much larger penalty. Get a quote before deciding to break.
Some lenders only allow a blend when you also take new money or renew early, and some charge a fee. Check what your lender offers.

Common questions

How do lenders calculate a blended rate?

Each lender has its own method. Many weight your current rate by the time left in your term and their rate for the new term by the rest. Some use a posted rate instead of a discounted one, which raises the blended rate. Ask your lender for the rate and how it was worked out.

Is blending better than breaking?

Not always. Blending avoids the penalty but usually gives a higher rate than you could get by switching lenders. If the penalty is small or market rates have dropped a lot, breaking can come out ahead. The table above compares both over the same period.

Can I blend and borrow more?

Many lenders offer a blend-and-increase, where new money is added at today’s rate. That is a refinance-style application and you would need to qualify. This calculator only covers blending the existing balance.

Does a blend reset my term?

Usually yes. You start a new term, often five years, at the blended rate. Your maturity date moves out, which delays your next chance to shop around without a penalty.

Sources

FCAC: prepayment penalties (rules checked 2026-10-31)
Interest Act, section 6 (rules checked 2026-10-31)