Blended Rate Calculator — Weighted Average Interest Rate
Enter the outstanding balance and annual rate for each of your loans (up to three) to find the blended interest rate — the single weighted-average rate that represents your total interest cost.
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Weighted average rate across all loans, weighted by outstanding balance
- 1
Total outstanding balance
200,000 + 50,000 = 250,000 - 2
Weighted interest sum
200,000 × 3.5% + 50,000 × 6% = 1,000,000Each loan's rate is weighted by its share of the total balance. - 3
Blended rate
1,000,000 ÷ 250,000 = 4
How does this calculator work?
The blended rate is R = Σ(balance × rate) / Σ(balance) — a weighted average where larger loans have more influence. For example, a £200 000 loan at 3.5% and a £50 000 loan at 6% blend to a rate of (200 000 × 3.5 + 50 000 × 6) / 250 000 = 4.1%. Use it to compare the effective cost of your current debt mix with a proposed consolidation rate.
Formula
How this is calculated
A blended rate is a weighted average where each loan's rate is weighted by its share of the total outstanding balance. A larger loan pulls the blended rate closer to its own rate — so consolidating a small high-rate loan into a larger low-rate loan will shift the blended rate only modestly toward the lower rate.
The formula is R = Σ(B_i × r_i) / Σ(B_i), where B_i is the outstanding principal on loan i and r_i is its annual interest rate. This gives the single rate that, applied to the combined balance, would produce the same total annual interest as the separate loans together.
Blended rates are used when a homeowner refinances or merges mortgages, when a business consolidates credit facilities at different rates, or when comparing the effective cost of a portfolio of student or auto loans. The blended rate is an interest-cost measure — it does not account for different loan terms, fees, or amortisation schedules. For a complete refinancing decision, compare the blended rate with the rate offered on a new consolidated loan, then factor in any break costs or origination fees.
Frequently asked questions
A simple average treats all loans equally regardless of size. A £200 000 loan at 3% and a £10 000 loan at 10% have a simple average of 6.5%, but your actual interest cost is dominated by the large loan. The weighted average (≈ 3.4%) correctly reflects where most of your interest is actually going.
Common uses: (1) checking whether refinancing multiple mortgages into one makes financial sense; (2) understanding the effective interest cost of a mix of student loans; (3) business treasury management when reporting the average cost of debt across credit facilities at different rates.
Yes — paying down a high-rate loan faster lowers its remaining balance, reducing its weight in the blended average and pulling the blended rate down. Conversely, extra payments on a low-rate loan have little effect on the blended rate. This is why accelerated payoff of the highest-rate loan minimises total interest paid.
Also known as
TG we-Calculate Editorial Team. (2026). Blended Rate Calculator — Weighted Average Interest Rate [Online calculator]. TG we-Calculate. https://we-calculate.com/calculator/blended-rate-calculator
TG we-Calculate Editorial Team. "Blended Rate Calculator — Weighted Average Interest Rate." TG we-Calculate. 2026. https://we-calculate.com/calculator/blended-rate-calculator.
TG we-Calculate Editorial Team, "Blended Rate Calculator — Weighted Average Interest Rate," TG we-Calculate, 2026. [Online]. Available: https://we-calculate.com/calculator/blended-rate-calculator
@misc{wecalculate_blended_rate_calculator, title = {Blended Rate Calculator — Weighted Average Interest Rate}, author = {{TG we-Calculate Editorial Team}}, howpublished = {\url{https://we-calculate.com/calculator/blended-rate-calculator}}, year = {2026}, note = {TG we-Calculate} }
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