What this calculator answers
Many variable-rate mortgages in Canada keep the payment the same when prime changes. When rates rise, more of each payment goes to interest and less to principal. At the trigger rate, the whole payment is interest and nothing pays down the balance. Above it, the unpaid interest can be added to what you owe.
This calculator finds your trigger rate from your balance and payment, shows how your balance would move over the next year if rates climbed past it, and gives the payment that would put you back on your original schedule.
How the calculation works
- Interest per payment = balance x periodic rate. The periodic rate comes from the annual rate and your contract's compounding (monthly by default for variable).
- Trigger rate = the annual rate at which interest per payment equals your payment, converted back to the same compounding.
- The scenario table holds your payment fixed and runs 12 months of payments at each rate. When interest is larger than the payment, the shortfall is added to the balance.
- The payment to stay on schedule is the regular payment that pays off the balance over the years left on your original amortization, at that rate.
Assumptions and limits
- Your balance, payment and rate are used as entered. Rates change in steps when prime moves; the table shows a sudden change to keep it simple.
- Trigger rates, trigger points and what happens when you reach them are set by each lender and your contract, not by a regulation.
- Adjustable-rate mortgages, where the payment changes every time prime moves, do not have a trigger rate in the same way.
- Prepayments, missed payments and rate changes during the year are not included.
Common questions
What happens when I hit my trigger rate?
It depends on your lender. Some raise your payment, some ask for a lump sum, and some let the unpaid interest be added to your balance until you reach the trigger point or your renewal. Lenders usually contact you when you get close; check your contract and any letters they send.
Is it bad if my balance grows for a few months?
It costs you, because you then pay interest on interest, and you may face a payment shock at renewal when the payment is reset to your remaining amortization. The table shows the payment you would need to get back on track.
How can I move my trigger rate higher?
Raise your regular payment or make a lump-sum prepayment, within your prepayment privileges. A bigger payment or smaller balance means rates have to rise further before you hit it.
Should I lock into a fixed rate?
Locking in stops your payment from depending on prime but it is not always cheaper. The lock-in calculator compares staying variable with locking in under different rate paths.
Sources
- Interest Act, section 6 (rules checked 2026-10-31)
- Bank of Canada, October 28, 2026 decision (rules checked 2026-10-31)