What is a Trigger Rate

David Sahibzada • December 14, 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.


David Sahibzada

Senior Mortgage Advisor

LET'S TALK

What Is a Cashback Mortgage and How Does It Work?

By David Sahibzada • September 29, 2026
Cashback Mortgages: Are They Worth It? Here’s What You Need to Know If you’ve been exploring mortgage options and come across the term cashback mortgage , you might be wondering what exactly it means—and whether it’s a smart move. Let’s break it down in simple terms. What Is a Cashback Mortgage? A cashback mortgage is just like a regular mortgage—but with one extra feature: you receive a lump sum of cash when the mortgage closes . This cash is typically: A fixed amount , or A percentage of the total mortgage , usually between 1% and 7% , depending on your mortgage term and lender. The money is tax-free and paid directly to you on closing day. What Can You Use the Cashback For? There are no restrictions on how you use the funds. Here are some common uses: Covering closing costs Buying new furniture Renovations or home upgrades Paying off high-interest debt Boosting your cashflow during a tight transition Whether it’s to help you settle in or catch up financially, cashback can offer a helpful buffer— but it comes at a cost . The True Cost of a Cashback Mortgage Here’s the part many people overlook: cashback mortgages come with higher interest rates than standard mortgages. Why? Because the lender is essentially advancing you a small loan upfront—and they’re going to make that money back (and then some) through your mortgage payments. So while the upfront cash feels like a bonus, you’ll pay more in interest over time to have that convenience. Breaking Down the Numbers It’s hard to give a blanket answer about how much more you’ll pay since it depends on: Your interest rate The cashback amount The mortgage term Your payment schedule This is why it’s important to run the numbers with a mortgage professional who can help you compare this option with others based on your personal financial situation. Are You Eligible for a Cashback Mortgage? Not everyone qualifies. Cashback mortgages generally come with stricter requirements . Lenders often want to see: Excellent credit history Strong, stable income Low debt-to-income ratio If your mortgage file includes anything “outside the box”—like being self-employed or recently changing jobs—qualifying for a cashback mortgage might be tough. What If You Need to Break the Mortgage? This is one of the biggest risks with cashback mortgages. If your circumstances change and you need to break your mortgage early, you could be on the hook for: Paying back some or all of the cashback you received, and A prepayment penalty (typically the interest rate differential or 3 months’ interest—whichever is higher) That can be a very expensive combination. So if there’s even a chance you might need to sell, refinance, or move before your term is up, a cashback mortgage might not be the best fit. Should You Consider a Cashback Mortgage? Maybe—but only with eyes wide open. Cashback mortgages can be helpful in the right scenario, but they’re not free money. They’re a lending tool that benefits the lender , and the key is knowing exactly what you’re agreeing to. Final Thoughts: Talk to an Expert First Choosing the right mortgage isn’t just about the lowest rate or the biggest perk—it’s about making a choice that fits your whole financial picture. If you’re considering a cashback mortgage, or just want to explore all your options, let’s talk. As an independent mortgage professional , I can help you weigh the pros and cons of various products, so you can make a confident, informed decision. Have questions? I’d be happy to help—reach out anytime.

Wait! Are You Really Ready to Buy That Home?

By David Sahibzada • September 15, 2026
So, you’re thinking about buying a home. You’ve got Pinterest boards full of kitchen inspo, you’re casually scrolling listings at midnight, and your friends are talking about interest rates like they’re the weather. But before you dive headfirst into house hunting— wait . Let’s talk about what “ready” really means when it comes to one of the biggest purchases of your life. Because being ready to own a home is about way more than just having a down payment (although that’s part of it). Here are the real signs you're ready—or not quite yet—to take the plunge into homeownership: 1. You're Financially Stable (and Not Just on Payday) Homeownership isn’t a one-time cost. Sure, there’s the down payment, but don’t forget about: Closing costs Property taxes Maintenance & repairs Insurance Monthly mortgage payments If your budget is stretched thin every month or you don’t have an emergency fund, pressing pause might be smart. Owning a home can be more expensive than renting in the short term—and those unexpected costs will show up. 2. You’ve Got a Steady Income and Job Security Lenders like to see consistency. That doesn’t mean you need to be at the same job forever—but a reliable, documented income (ideally for at least 2 years) goes a long way in qualifying for a mortgage. Thinking of switching jobs or going self-employed? That might affect your eligibility, so timing is everything. 3. You Know Your Credit Score—and You’ve Worked On It Your credit score tells lenders how risky (or trustworthy) you are. A higher score opens more doors (literally), while a lower score may mean higher rates—or a declined application. Pro tip: Pull your credit report before applying. Fix errors, pay down balances, and avoid taking on new debt if you’re planning to buy soon. 4. You’re Ready to Stay Put (At Least for a Bit) Buying a home isn’t just a financial decision—it’s a lifestyle one. If you’re still figuring out your long-term plans, buying might not make sense just yet. Generally, staying in your home for at least 3–5 years helps balance the upfront costs and gives your investment time to grow. If you’re more of a “see where life takes me” person right now, that’s totally fine—renting can offer the flexibility you need. 5. You’re Not Just Buying Because Everyone Else Is This one’s big. You’re not behind. You’re not failing. And buying a home just because it seems like the “adult” thing to do is a fast way to end up with buyer’s remorse. Are you buying because it fits your goals? Because you’re ready to settle, invest in your future, and take care of a space that’s all yours? If the answer is yes—you’re in the right headspace. So… Are You Ready? If you’re nodding along to most of these, amazing! You might be more ready than you think. If you’re realizing there are a few things to get in order, that’s okay too. It’s way better to prepare well than to rush into something you're not ready for. Wherever you’re at, I’d love to help you take the next step—whether that’s getting pre-approved, making a plan, or just asking questions without pressure. Let’s make sure your homebuying journey starts strong. Connect anytime—I’m here when you’re ready.