A blended mortgage is a way for borrowers to take advantage of a better rate or to gain access to their equity without having to fork over penalty fees for breaking their mortgage contract early.
So why is it called a blended mortgage?
Simple, its name comes from the fact that you blend the interest rate on your existing mortgage with the interest rate of a new mortgage, more than likely an interest rate being offered at a lower rate.
A blended mortgage is available to those who wish to gain access to the equity they’ve built up as well as those who want to take advantage of a lower interest rate to save money.
The blend and extend option means you’ll blend your existing interest rate with the interest rate your lender currently offers to get a new interest rate somewhere in between. Then your lender will give you a new term by extending it back to its full length.