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Finance

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  • September 2, 2021
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Blended-Rate Loan

A real estate loan that takes the remaining principal balance and interest rate of an existing loan and blend them into a new loan. Under this arrangement, the buyer of a property (the mortgagor) would not take over an existing low-interest loan, because it may have a substantially low balance. Instead, a new loan for a higher amount is negotiated with the existing lender, in which the interest rate that is based on a weighted average of the low existing rate and the high rate charged on the added funds required to consummate the purchase of the property.

This loan combines the low existing contract rate and the high new market rate into a blended rate that helps increase the loan amount and averages the two interest rates into one single rate that is higher than the lower rate and lower than the higher rate.


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