Trigger rate
See when a variable-rate mortgage payment hits the trigger point and how much buffer remains.
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Trigger rate
Calculate the trigger rate, payment shortfall, and required increases to maintain amortization.
Calculation notes
Methodology for the trigger rate
Calculate your trigger rate — the mortgage rate where your monthly payment covers only interest with nothing going to principal.
See how close your current variable rate is to the trigger, and how many more Bank of Canada hikes you can absorb.
Model different payment amounts and balances to understand your safety margin in a rising-rate environment.
Essential for variable-rate mortgage holders with fixed payments — know your number before the lender notice arrives.
Inputs to check
- Current mortgage balance
- Variable rate and payment amount
- Amortization length
Assumptions
- Trigger rate = (Monthly Payment x 12 / Mortgage Balance) x 100.
- Only applies to variable-rate mortgages with fixed payments — not adjustable-rate mortgages.
- Assumes constant balance; lump-sum payments reduce the balance and lower the trigger rate.
- Lender response to trigger events varies — confirm your specific contract terms.
How this calculator works
Calculate your trigger rate — the mortgage rate where your monthly payment covers only interest with nothing going to principal.
See how close your current variable rate is to the trigger, and how many more Bank of Canada hikes you can absorb.
Model different payment amounts and balances to understand your safety margin in a rising-rate environment.
Essential for variable-rate mortgage holders with fixed payments — know your number before the lender notice arrives.
Inputs you will need
- Current mortgage balance
- Variable rate and payment amount
- Amortization length
Assumptions and limitations
- Trigger rate = (Monthly Payment x 12 / Mortgage Balance) x 100.
- Only applies to variable-rate mortgages with fixed payments — not adjustable-rate mortgages.
- Assumes constant balance; lump-sum payments reduce the balance and lower the trigger rate.
- Lender response to trigger events varies — confirm your specific contract terms.
Example scenarios
Current variable rate check
Payment: $2,500/month, Balance: $500K. Trigger rate = ($2,500 x 12 / $500K) x 100 = 6.00%. If current rate is 5.45%, you have 0.55% headroom — roughly two more 0.25% BoC hikes.
Near trigger — action required
Payment: $2,200/month, Balance: $480K. Trigger rate = 5.50%. Current rate: 5.45%. Only 0.05% headroom. One more 0.25% hike triggers lender notice.
New variable — comfortable buffer
$600K mortgage at prime minus 0.80% (4.65%) with $3,200 payment. Trigger rate = 6.40%. 1.75% headroom — roughly seven 0.25% BoC hikes.
Trigger reached — next steps
At trigger, payment no longer covers interest. Lender requires: increase payment, make lump sum, convert to fixed, or extend amortization. Ignoring means negative amortization — balance grows monthly.
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Frequently asked questions
What exactly is a trigger rate?
The mortgage rate at which your fixed monthly payment covers only interest with zero dollars to principal. Only applies to variable-rate mortgages with fixed payments. When your rate rises above trigger, your lender requires action — typically payment increase, lump sum, or conversion to fixed.
How do I calculate my trigger rate?
Formula: (Monthly Payment x 12 / Mortgage Balance) x 100. Example: ($2,500 x 12 / $500K) x 100 = 6.00%. This calculator does it automatically.
What happens when I hit the trigger?
Your lender sends a trigger rate notice with options: increase payment, make lump-sum payment, convert to fixed, or extend amortization. Ignoring means negative amortization — unpaid interest added to your balance monthly — causing problems at renewal.
Do adjustable-rate mortgages have trigger rates?
No. Adjustable-rate mortgages (ARMs) change your payment with each prime rate change, always covering interest plus some principal. Trigger rates only apply to variable-rate mortgages with fixed payments.
How much headroom should I maintain?
A comfortable buffer is 1.00-2.00% above your current rate, giving 4-8 standard 0.25% BoC hikes before trigger. If buffer is under 0.50%, consider increasing your payment voluntarily now to avoid negative amortization.