What is a trigger rate?
A trigger rate is the interest rate level where your lender can adjust your payment amount, even though it’s normally fixed. The trigger rate applies to variable-rate mortgage holders that are on a fixed payment schedule.
Variable rate mortgages have trigger rates to ensure home owners are always building equity with their payments, especially as interest rates rise.
With a variable-rate mortgage, the amount you pay is usually fixed. What changes is the amount of your payment going to interest. This interest rate will be affected by the central bank’s.
Sometimes lenders lump variable-rate mortgages together with adjustable rate mortgages, which are different. With an adjustable rate mortgage the payments themselves increase or decrease due to shifting interest payments. With an adjustable rate mortgage — like a fixed-rate mortgage — there is…
