What is the difference between blend-and-extend and blend-to-term?

Blend-to-term keeps your existing maturity date and only blends the rate. Blend and extend resets your mortgage to a brand-new, longer term, extending your rate certainty further into the future.

Does blend and extend avoid a prepayment penalty?

Usually yes. Because you are not discharging and re-borrowing, the lender generally does not apply a prepayment penalty, which is a key reason borrowers choose this option.

Is a blended rate always the best deal?

Not necessarily. A blended rate sits above the lowest current rate, so it can be worth comparing against breaking the mortgage and switching lenders, even with a penalty, to see which costs less overall.

Mortgage Glossary

What is Blend and Extend?

Blend and extend is a mortgage option that combines your existing interest rate with the lender's current rates to create a new blended rate, while resetting your term to a longer one. It lets you change your rate mid-term without breaking the contract. Borrowers often use it to lock in stability or avoid a prepayment penalty.

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Quick answer

Also known as: blend and extend, blended mortgage, blend-to-term

Key points

Blend and extend mixes your old rate with current rates into one blended rate.
It resets your mortgage to a new, longer term rather than keeping the old maturity date.
It usually avoids a prepayment penalty because you do not formally break the mortgage.
The blended rate sits between your old rate and today's market rate.
It keeps you with your current lender, so always compare it against switching.

Blend and Extend explained

With a blend and extend, your lender weighs your current rate against today's market rate and the remaining time on your term to calculate a single blended rate. Your mortgage is then extended to a fresh, longer term at that rate, so you stay with the same lender rather than discharging and re-borrowing.

This differs from a simple blend-to-term, which keeps your existing maturity date. Blend and extend resets the clock to a new full term, which can be attractive when you want to extend a rate hold into the future. Because you are not formally breaking the mortgage, you usually sidestep the prepayment penalty that would apply if you discharged the loan to refinance elsewhere.

What a Blend and Extend is for

Blend and extend exists to give borrowers a way to adjust their rate and term partway through a mortgage without triggering a costly penalty. It suits people who want to take advantage of, or hedge against, changing rates while staying committed to their current lender for a longer horizon.

How it can help you

Blending and extending can lower your rate or lock in certainty while avoiding the penalty of breaking your mortgage outright. It is especially useful when rates have moved and you want to reset before renewal. Lenderoo shops 40+ lenders free, so you can compare a blend-and-extend offer against switching lenders to see which truly costs less.

When it comes up

Blend and extend is handy when you are partway through a five-year term, rates have changed, and you want to renegotiate without paying to break the contract. It also helps if you plan to stay in your home long term and want to extend your rate certainty now.

Example: blending two rates

Say you have three years left on a mortgage at 6% and today's five-year rate is 4.5%. Instead of breaking the loan and paying a penalty, your lender blends the two rates, weighted by the remaining term and the new term.

The result might be a blended rate around 5%, locked in over a fresh five-year term. You give up some of the savings of the lowest current rate, but you avoid the prepayment penalty and gain rate certainty for the next five years.

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Questions & answers

Blend and Extend: frequently asked questions

Common questions Canadians ask about blend and extend.

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Related mortgage terms

Prepayment Penalty

Fee charged for paying off a mortgage early.

Read definition

Term

The length of time your current mortgage contract, rate, and conditions stay in effect before you must renew.

Read definition

Renewal

Renegotiating your mortgage terms at the end of a term.

Read definition

Refinancing

Replacing your existing mortgage with a new one.

Read definition

Rate Hold

A lender guarantee locking an interest rate for a set period before closing.

Read definition

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Mortgage Glossary

What is Blend and Extend?

Find my best mortgage Back to glossary

Quick answer

Also known as: blend and extend, blended mortgage, blend-to-term

Key points

Blend and extend mixes your old rate with current rates into one blended rate.
It resets your mortgage to a new, longer term rather than keeping the old maturity date.
It usually avoids a prepayment penalty because you do not formally break the mortgage.
The blended rate sits between your old rate and today's market rate.
It keeps you with your current lender, so always compare it against switching.

Blend and Extend explained

What a Blend and Extend is for

How it can help you

When it comes up

Example: blending two rates

Have a question about blend and extend?

Lenderoo shops 40+ lenders for free and matches you with a mortgage professional who explains every term — and finds your best rate.

Get pre-approved free Talk to an expert

Questions & answers

Blend and Extend: frequently asked questions

Common questions Canadians ask about blend and extend.

Keep learning

Back to full glossary

Understand your mortgage with confidence

Lenderoo shops 40+ lenders for free and pairs you with a mortgage professional who keeps the jargon simple — and gets you a great rate.

Find my best mortgage Explore the glossary