You need to calculate the average balance of each loan to determine the aggregate average balance of the 2 loans. This average will determine whether the total mortgage balance is above the limit of $1 million. You do not add up the full balance for the full year.
The average balance of each loan for the year is obtained by adding the monthly average balances and dividing the total by 12. In your example, the second loan only has a balance of $600,000 for one month and its average balance for the year is $600,000/12 = $50,000. To do the calculations, you'll need the monthly balances for each loan.
Please read IRS Publication 936, especially the worksheet on page 12:
https://www.irs.gov/pub/irs-pdf/p936.pdf
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