Those borrowers who are in a static variable rate mortgage. If you are in a variable rate mortgage and your payment has remained unchanged month over month, you are in a static variable rate product. If your monthly payments have changed, you are in an adjustable-rate mortgage and can disregard the trigger rate & trigger point.

There are various reasons as to why rates are changing but the number one reason is no secret, Inflation.

Let’s look at a simple example A $1 cup of coffee in a 2% inflationary period, takes 36 years to double via compound interest A $1 cup of coffee in a 4% inflationary period, takes 18 years to double via compound interest A $1 cup of coffee in an 8% inflationary period, takes 9 years to double via compound interest Because Inflation compounds year over year; At a 2% rate of inflation, we consumers can handle that slow increase over time At a higher than 2% rate of inflation, we consumers will see the cost of every day essentials spiral beyond our control The longer inflation remains…

As interest rates on variable products increase and the payments don't change, there will be a point where the principal and interest payments can no longer cover the interest charged on the Mortgage or Term Portion. This happens when your rate has exceeded the Trigger Rate. If the variable rate increases beyond the Trigger Rate, the product will have an increasing balance unless the regular payment (or lump sum payments) are increased enough to cover the outstanding interest.

Each lender with have their own variation, however, here is a general summary: For a Conventional Variable Rate mortgage (VRM), the Trigger Point is when the principal amount plus interest owing exceeds 80% of the fair market value of the property as determined by TD. For an Insured VRM, the Trigger Point is when the principal amount plus interest owing exceeds 105% of the original principal amount of the mortgage loan. For mortgage products with HELOC components (term portions), if at any time the outstanding principal amount (including any deferred interest) exceeds the original principal amount, then the Term Portion has reached the…

Easiest way to find your trigger rate is to download our app to access all state-of-the-art mortgage calculators – https://bit.ly/3swSgcI Use the “Simple Mortgage Calculator” to plug in your rate, mortgage balance & amortization to find out your trigger rate.

Consider the HELOC option A big benefit to the home equity line of credit is that it only requires interest payments, ultimately creating more cash flow monthly. This option would be for those who are more concerned with monthly cash flow & less concerned with paying down their principal. Transfer your adjustable-rate mortgage (ARM) to a static payment variable (VRM) While acquiring the static payment component, there is a trigger rate to ensure principal is being paid. Refinance A simple refinance may benefit you for a few reasons: You can lock into shorter term fixed products, reducing any future risks--> Extending your amortization out will…