Trigger Rate

The rate at which a fixed-payment variable stops paying down principal.

On a variable-rate mortgage with a fixed payment, the trigger rate is the interest rate at which the interest portion equals your entire payment, so none goes to principal. Past it, the response is lender-specific: some require a higher payment, others let the shortfall add to the balance until a further threshold. It is the hidden risk of the fixed-payment variable, so ask your lender what your trigger rate is and how they handle it.

General information only, not legal, tax, or financial advice. Rules change and vary by province; confirm the current details with the relevant authority before you rely on them.