Do you know what your mortgage trigger rate is?

by | Jun 16, 2023 | Finance and Business

Interest rates have risen dramatically in the past year. When your mortgage has a variable interest rate with a fixed payment, you may reach a trigger rate when interest rates rise.

Your trigger rate is the interest rate at which your mortgage payment will no longer cover the principal and interest due for that period.

Once you’ve reached the trigger rate, your payment will only cover interest payments and no money will go towards paying down your principal amount. That means that you’ve stopped paying down your loan.

The best way to find out your trigger rate is to review your mortgage or loan agreement. You can also contact your bank. They’ll be able to calculate the exact rate for you. They’ll also be able to let you know your options if you reach it.

For example, your bank may offer to extend your amortization. This is the time period over which the mortgage loan is reduced and eventually paid off by regular payments. Extending the amortization would avoid having to increase the amount of your recurring payments. However, extending your amortization means paying for a longer period of time and paying more interest in the long run. If you do look into mortgage relief options, it’s important to know what the impact will be for your entire mortgage.

If you’re worried about your mortgage, contact your bank to discuss your options. You could also seek advice from reliable and trusted sources to explore your financial options. Contact a financial professional, such as a licensed financial advisor or an accredited credit counsellor, to discuss a plan. Do your research to find a trustworthy organization and a qualified professional.

Find more information at canada.ca/money

Related Content

3 tips to keep your home-based business safe and secure

3 tips to keep your home-based business safe and secure

Your home is your sanctuary. But if you run a home-based business, it could also be your office, showroom, storage locker and more. Therefore, it is doubly important to protect it and its contents. Here are three ways to protect your home and business. Protect your...

read more
The hidden costs of condos and how to manage them

The hidden costs of condos and how to manage them

Condo ownership has surged in recent decades. For a growing number of Canadians, owning a condo is one of the most significant investments of their lives. Condos can be an attractive option based on cost, convenience, amenities and location. One advantage is that you...

read more
Quick facts about the new Underused Housing Tax

Quick facts about the new Underused Housing Tax

You may or may not have heard that there’s an Underused Housing Tax (UHT) in Canada. Is it what you think it is? Does it apply to you? Here are few quick facts you should know. It’s not the vacancy tax you’ve heard about You may have heard of vacancy taxes in some...

read more
How to get the government money available to you

How to get the government money available to you

Let’s face it: no one loves doing their taxes. But, in addition to being your civic duty, it’s your doorway into receiving many of the federal rebates, benefit or credit payments you could be eligible for. Here are four ways to make sure you get all the money you’re...

read more
Tax-time guide – Tips for stress-free filing

Tax-time guide – Tips for stress-free filing

The tax deadline is inevitable every year, whether it fills you with a deep dread or you actually enjoy putting everything together. Here are some important things you should know this year to help you get your taxes done as easily and effectively as possible. File...

read more