HAVE YOU REACHED YOUR TRIGGER RATE?

Not sure what this means?

It means you have reached your mortgage trigger rate when your regular mortgage payment amount is no longer enough to pay off the interest you've accrued since your last payment. This means the entirety of your mortgage payment is going to interest payment while none of it is going towards paying down your principal.

Not everyone is impacted though, such as those with fixed rates and even some on variable mortgages. That being said, with all the recent interest rate increases, and possibly more to come down the road as the government is trying to curb the rising inflation rate, if you are on a variable mortgage, you may be inching closer towards your “trigger rate”.

For a better understanding, what is actually being “triggered” is an increase to your balance owing. Because your regular payment is no longer enough to cover the cost of borrowing, the entire payment is applied to interest. Any amount still owing is termed deferred interest and added to your balance to be paid off sometime down the road. When you’ve reached your trigger rate, you’ve stopped paying off your mortgage and started borrowing more.

 If you are not sure if you are close to your trigger rate, contact your lender/mortgage provider. They can let you know where you stand and can work with you to determine the best course of action for you and ensure you are paying down your mortgage the way you want. Some options include: increasing the monthly amount of your payments, lump-sum payments, converting to a fixed mortgage rate, extending your amortization period or even paying off your mortgage in full (the latter option may be difficult, but is an option nonetheless). 

Do your research and act!