What Is a Trigger Rate and Do You Need To Worry About It?

Carola Singer • December 7, 2022

This is going to be the last time we’re talking about interest rates and mortgages this year. And if we’re happy about it, you’re likely ecstatic.


So, let’s get to today’s topic: what is a trigger rate and do you need to worry about it?


Brief Recap of Variable Rate Mortgages


We’ve covered this previously, but just so we’re all starting from the same page.


A variable rate mortgage means your interest rate is dependent on the Prime rate. Prime rate is the interest rate used by your lender or bank when lending to clients and is related to the Bank of Canada’s overnight lending rate.


When Bank of Canada rates go up, Prime Rates go up, and the interest you pay on your variable-rate mortgage also goes up. This interest payment can be paid in two ways:



  • Static Variable Rate Mortgage: Your monthly payment remains the same, but more of that payment goes towards interest.
  • Adjustable Rate Mortgage: Your monthly payment will increase when there is an increase in rates. Your principal payment will remain the same.


That was the shortest explanation of those two products we’ve ever done…might have to stick to that format.


Trigger Rates with Static Variable Rate Mortgage


The trigger rate is something that impacts static variable-rate mortgage holders. It’s the point at which your regular payment is no longer paying any principal; you’re just paying interest.


Definitely a ‘triggering’ situation.


When you reach this trigger rate, there’s an increase in the balance owed on your mortgage. This is because your payment is no longer enough to cover the cost of borrowing.


Any amount still owing is deferred interest to be paid at a later date.


But if you’re asking, “well, what is my trigger rate?” you’re going to have to give your trusted mortgage broker a call. Your trigger rate will be different from your neighbour’s, your cousin twice removed, and your niece who just bought her first house.


What Do You Do If You’ve Reached Your Trigger Rate?


According to a report by the Bank of Canada, “roughly half of all mortgage holders with static-payment variable-rate mortgages have already reached their trigger rate.”


Simply, you could leave your payment the way that it is, making interest-only payments until rates decrease.


But, we don’t recommend that.


You don’t want to be owing more on your mortgage, which will demand a higher interest payment down the road, even if (and when) rates come down. When this happens, you actually start to go backward on your amortization.


This is called ‘negative amortization’ and means that the principal payments are negative. Your mortgage balance increases each month in order to cover the interest cost.


Talk with your mortgage broker about how you can increase your monthly payment or change your payment schedule to make it more manageable.


Because you’re a variable-rate holder, it’s easier to break your mortgage if you need to refinance or move to a fixed-rate mortgage.


And don’t wait until you think rates will go down.


Rates are unpredictable to even those who make it their job to predict them. Reach out to a mortgage broker now if you’re coming up to your trigger rate.


We Have To Mention Trigger Point


Not to add more mud to the muddy waters, but alongside the trigger rate, there’s a trigger point.


A trigger point is when the balance on your mortgage is back at or exceeds the amount you borrowed when you first got your mortgage.


This could also be described as a percentage of your home’s value. For example, if your mortgage balance is over 100% of your home’s value, you’re at your trigger point.


Most lenders in Canada will use a trigger point of when the principal amount plus interest owing exceeds 80% of the fair market value.


When you reach this point, it’s going to trigger an action (see what we did there?)


Your lender is going to ask that you either increase your monthly payment, make a lump-sum payment, convert to a fixed rate or refinance to extend your amortization.


If you have any questions, please connect with me anytime!


This article was originally published on the Quantis Mortgage Solutions Website here.

RECENT POSTS 

Get Unbiased Advice: Work with an Independent Mortgage Pro

By Carola Singer • March 11, 2026
Why Work With an Independent Mortgage Professional? If you’re in the market for a mortgage, here’s the most important thing to know: Working with an independent mortgage professional can save you money and provide better options than dealing directly with a single bank. If that’s all you read—great! But if you’d like to understand why that statement is true, keep reading. The Best Mortgage Isn’t Just About the Lowest Rate It’s easy to fall for slick marketing that promotes ultra-low mortgage rates. But the lowest rate doesn’t always mean the lowest cost . The best mortgage is the one that costs you the least amount of money over time —not just the one with the flashiest headline rate. Things like: Prepayment penalties Portability Flexibility to refinance Amortization structure Fixed vs. variable terms …can all affect the true cost of your mortgage. An independent mortgage professional looks beyond the rate. They’ll help you find a product that fits your unique financial situation , long-term goals, and lifestyle—so you’re not hit with expensive surprises down the road. Save Time (and Your Sanity) Applying for a mortgage can be complicated. Every lender has different rules, documents, and policies—and trying to navigate them all on your own can be time-consuming and frustrating. When you work with an independent mortgage professional: You fill out one application They shop that application across multiple lenders You get expert advice tailored to your needs This means less paperwork , less stress , and more confidence in your options. Get Unbiased Advice That Puts You First Bank specialists work for the bank. Their job is to sell you that bank’s mortgage products—whether or not it’s the best deal for you. Independent mortgage professionals work for you. They’re provincially licensed, and their job is to help you: Compare multiple lenders Understand the fine print Make informed, long-term financial decisions And the best part? Their services are typically free to you . Mortgage professionals are paid a standardized fee by the lender when a mortgage is placed—so you get expert guidance without any out-of-pocket cost. Access More Mortgage Options When you go to your bank, you’re limited to that bank’s mortgage products. When you go to an independent mortgage professional, you get access to: Major banks Credit unions Monoline lenders (who only offer mortgages) Alternative and private lenders (if needed) That’s far more choice , and a much better chance of finding a mortgage that truly fits your needs and goals. The Bottom Line If you want to: Save money over the life of your mortgage Save time by avoiding unnecessary back-and-forth Access more lenders and products Get honest, client-first advice …then working with an independent mortgage professional is one of the smartest decisions you can make. Let’s Make a Plan That Works for You If you're ready to talk about mortgage financing—or just want to explore your options—I'm here to help. Let's connect and put together a strategy that makes sense for your goals and your future. Reach out anytime. I’d be happy to help.

Getting a Mortgage Shouldn’t Be Stressful—We Can Help

By Carola Singer • March 4, 2026
Buying a Home? Follow These 6 Key Steps for a Smooth Experience Buying a home is likely one of the biggest financial decisions you’ll ever make. It’s exciting—but it can also be overwhelming, especially when it comes to understanding how mortgage financing works. To help make the process smoother (and far less stressful), here are six essential steps every homebuyer should follow: 1. Start With a Mortgage Professional—Not MLS It’s tempting to start your home search by scrolling through listings and booking showings—but the real first step should be speaking with an independent mortgage professional . Unlike a bank that offers only one set of products, an independent mortgage expert has access to multiple lenders and options . That means better advice, better rates, and a better chance of finding a mortgage that truly fits your needs. 2. Build a Personalized Mortgage Plan Unless you’re buying your home with cash, you’ll need a solid financing strategy. That means: Reviewing your credit score Running affordability calculations Exploring different mortgage types, terms, and features Understanding down payments and closing costs The sooner you start planning, the more confident you’ll feel. Don’t wait until you’ve found the “perfect” property— get ahead of the process now . 3. Figure Out What You Can Actually Afford What a lender says you can borrow doesn’t always match what you can comfortably pay each month. Take a close look at your budget, lifestyle, and spending habits. Think about how your mortgage payments, property taxes, utilities, and other costs will fit into your everyday cash flow. Avoid the stress of being house-poor by knowing your real-life affordability , not just your paper pre-approval. 4. Get Pre-Approved the Right Way A true mortgage pre-approval isn’t just entering numbers into an online calculator. It means: Completing a mortgage application Submitting all your required documentation Having a mortgage professional fully assess your file When you’re officially pre-approved, you’ll shop for homes with confidence , knowing what you qualify for and that you’re financially ready. 5. Submit Your Documents Promptly and Stay Flexible Once you find a property and your offer is accepted, time is of the essence. That’s when all the upfront work you’ve done really pays off. Be ready to: Provide additional documentation if requested Respond to your mortgage professional quickly Stay flexible and proactive throughout the approval process Your lender needs to verify everything before finalizing the loan, so staying organized is key. 6. Don’t Make Big Financial Changes Before Closing Once you’ve secured financing and waived your conditions, freeze your finances until after you get the keys. Seriously—don’t: Change jobs Apply for new credit Take out a loan Make a large withdrawal Even small changes can throw off your approval. Keep everything status quo until you officially take possession. Recap: 6 Steps to a Smooth Home Purchase Connect with an independent mortgage professional Create a mortgage plan early Know what you can afford (not just what you qualify for) Get fully pre-approved Stay on top of documentation Avoid major financial changes before possession Ready to Buy with Confidence? If you’re thinking about buying a home—or just want to know what’s possible—let’s talk. I’ll help you map out a personalized plan that makes your homebuying journey feel simple, strategic, and stress-free. Reach out anytime. I’d love to help you get started.