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TimeValue Software Blog

Calculating Blended Rates

By Martel Pellerin

TValue is a popular tool for calculating the blended rate on a variable rate loan or for multiple loans in a portfolio. This is also known as the weighted average rate. With TValue, it is an easy exercise to get this magic number. Here are two examples of different customer cases we recently handled.

Variable Rate Loan

For a variable rate loan, you will have a starting rate followed by a rate change or a series of rate changes. This is how you would solve for the overall blended rate.

In this example, you have a loan with 3% interest for 2 years, an interest rate change for another 3 years, a third rate change for the remaining 5 years, and then a balloon.

First, we need to structure the loan to determine the cash flows. This is how the cash flows would appear in TValue.

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Once we have the schedule, we would go to File > Save As and add “Blended Rate” to the file name and to the Label as we need to create a unique schedule. Then we would delete all of the rate changes so we would be left with just the Loan and Payments. Next, we would enter “U” for unknown for the Nominal Annual Rate and click Calculate. In this case the blended rate would be 4.167%.

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Multiple Loans

If you have multiple loans and want to know the blended rate of the loans, you can input the loan and cash flows into TValue and solve for the Nominal Annual Rate.

In this case, we had a $200,000 loan at 5% for 10 years with payments of $2,121.31. We had a second loan for $100,000 at 7% for 5 years with payments of $1,975.81. You only need the cash flows from the two loans to solve for the blended rate. Then type “U” for unknown for the Nominal Annual Rate and click Calculate. TValue will alert you that your “cash flows are out of sequence”. Click OK and TValue will sort the cash flows chronologically to solve for the blended rate of 5.391% for these notes.

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These calculations to solve for a blended rate are simple to do with TValue.

If you have any questions using TValue, please feel free to give our Support Team a call at 800-426-4741 or email