Find The Best Mortgage Rates In Prince Edward Island

Your Guide To Getting The Best Mortgage Rates In Prince Edward Island

If you’re looking to buy a home and need a great mortgage rate in Prince Edward Island, Comparemortgages.ca is the definitive source. Our experienced team of professionals can assist in researching and understanding the market so that you can get an optimal deal and interest rate. We promise more than easy access to typical lenders – by providing expert consultation on industry trends, Comparemortgages.ca will save you time and money when applying for mortgages.

About PEI

As one of the maritime provinces of eastern Canada, Prince Edward Island is located in the Gulf of Saint Lawrence between New Brunswick and Nova Scotia. The sizable island, Canada’s smallest province, is distinguished by lighthouses, red-sand beaches, and beautiful agriculture. It is also well-known for its lobster and mussels.

Some Important Facts About PEI:

Prince Edward Island, or PEI, is Canada’s birthplace. First discovered by Jacques Cartier in 1534, it became a British colony called St. John’s Island in 1763. In 1798 King George III changed the name to Prince Edward Island in honour of his eldest son, Prince Edward. Home to both the contemporary Confederation Center of the Arts and Victorian government buildings, Charlottetown serves as PEI’s provincial capital, with Summerside being the only other city on the island. There are seven incorporated towns scattered throughout the province too. Agriculture plays an important role in PEI’s economy, occupying about half of the territory and producing one-third of Canada’s potatoes since 1771. Whether you’re sightseeing historical sites or exploring modern attractions, PEI has something for everyone to enjoy!

Compare Prince Edward Island Mortgage Rates

Below is a table displaying the best rates from the five largest banks in the country. You can easily compare the rates offered by major Canadian lenders and banks, including TD Bank, RBC, CIBC, HSBC, and Scotiabank. We take care of the research to guarantee you the lowest possible rates upfront every time.

Compare Big Bank Rates In Prince Edward Island

It can be time-consuming and frustrating to compare rates by yourself. With us, you can find everything you need in one convenient location. Also, ensure that you consider the mortgage product term length and type when comparing rates. For instance, if you are in the market for a fixed-rate mortgage, it is essential to examine the range of terms given by various banks, such as three-year and five-year offerings, and not just the interest rate.

About The Prince Edward Island Housing Market

Prince Edward Island home prices have experienced year-over-year price increases since 2009. The Bank of Canada (BoC) increases in its Key Policy Overnight rates in 2022 may have temporarily limited the growth of mortgages in the province. However, even though property prices are beginning to decrease – Prince Edward Island’s property market remains resilient, except for a few metro areas, prices have not dropped more than 20% thus far.

First-Time Home Buyer Programs In PEI

In Prince Edward Island, there are several incentives and programs for people buying homes for the first time, particularly to lessen their financial burden. These programs will assist you in funding your down payment, which is sometimes one of the largest obstacles in purchasing your first home, and offset some of the expenditures associated with the purchase.

What Are The Different Types Of Mortgages?

Open vs. Closed Mortgage

A mortgage is a loan taken out to finance the purchase of a home. There are two types of mortgages: open and closed. An open mortgage allows you to make partial or full repayments and/or pay off your loan in full at any time without penalty. Open mortgages typically have higher interest rates while providing more flexible repayment terms than closed mortgages. A closed mortgage typically has a more attractive interest rate over a fixed term though you are limited by how much extra you can pay toward the mortgage each year.  Closed mortgages typically come with large penalties for breaking the mortgage term early. Closed mortgages are better suited to those who plan to keep their home for a more extended period and prefer a fixed rate and payment amount throughout the term.

Fixed Mortgages

Throughout a fixed-rate mortgage, your interest rate remains constant (1-10 years). The five-year fixed-rate mortgage is undoubtedly the most popular option among Canadian homeowners. Nevertheless, there may be better choices for some despite its popularity. Homebuyers who want a consistent payment schedule, stick to a strict monthly budget, or are generally more cautious are drawn to fixed-rate mortgages.

Variable Interest Rate Mortgages

Throughout your term, a variable interest rate may rise and fall. Your rate may be lower than if you pick a fixed rate if you select a variable interest rate such as the 5-year variable rate in PEI.

Two categories of variable mortgages exist a) variable rates with fixed payments and b) variable rates with variable payments.

Fixed Payments With A Variable Interest Rate

In general, despite changes in interest rates in PEI, the payment under this option stays the same over time.

If the interest rate rises, less of your payment will go to the principal, and more will go toward the interest.

More of your payment goes toward the principal as the interest rates in PEI decrease. This results in quicker mortgage repayment.

However, your lender may re-adjust your payments if the interest rates in PEI rise above a specific percentage or trigger rate based on the terms of your mortgage contract. Your mortgage will be paid off at the end of the amortization period, thanks to this increase in payments. 

Adjustable Payments With A Variable Interest Rate

If the interest rate increases, your payment amount changes if you have flexible payments. Each payment has a particular portion that goes toward the principal. As interest rates vary, the interest component also changes. After the term, you will know the principal you have paid.

Land Transfer Tax In Prince Edward Island

Real property tax is the name given to land transfer tax in Prince Edward Island. It applies to every property bought, including land, water-covered land, land with buildings on it, bulk storage tanks, and other constructions besides buildings, including equipment, installations, and towers.

Affidavits of a homebuyer must be submitted to the Registrar of Deeds by the buyer of real estate. At the time of registration, a tax of 1% of the higher of the purchase price or assessed property value must be paid.

What Affects My Mortgage Rate In PEI? 

Getting the lowest interest rate in PEI depends heavily on factors like credit score and income. The riskier the borrower, the greater the interest rate could be due to these factors.  However, given that no-frills mortgage packages frequently provide rock-bottom mortgage rates in PEI, it is undoubtedly not the most crucial factor in a mortgage. In other words, even if a borrower is eligible for the lowest rate, choosing the lowest-rate program frequently requires them to forego other advantages like prepayments and porting rights.

Instead of choosing the lowest mortgage rates in PEI, there are several alternative options to save money throughout the course of the mortgage, such as rounding up mortgage payments or making lump sum payments as bonuses or other income is received during the year. It’s crucial, nevertheless, to stay under your lender’s permitted yearly maximum for additional payments.

Down Payment

When you take out a mortgage, you must know all the additional costs involved. One such cost is default insurance which may be required to purchase a home. Default insurance can add several thousand dollars on top of your regular mortgage payments, so it’s worth familiarizing yourself with how much you need to put down for a down payment to avoid it. Generally speaking, this must be over 20% of the purchase price. Otherwise, default insurance will likely be a mandatory requirement. Although sometimes expensive and inconvenient, understanding these extra costs is essential to secure your dream home without any financial surprises.

Amortization Period

Having a longer amortization term means your mortgage payment will be reduced since they are spread out over a lengthier period (the maximum is 25 years on mortgages with less than a 20% down payment and 30 years on mortgages with 20% or higher down payments). Higher interest rates in PEI might accompany longer amortizations. As your mortgage is paid off over a longer period of time, you will pay more in interest.

Property Usage

Purchasing a property that you plan to occupy is referred to as owner-occupied and is understood to be your primary dwelling place. Borrowers will usually pay higher interest rates in PEI than on a personal home if they’re purchasing an investment property to rent. Due to this rationale, people often pay the mortgage on their principal property before any rental property. This is why lenders thus include more risk in the rates for rental properties.

Mortgage Type

Your mortgage rate will depend on the type of mortgage rate in PEI, which is either variable vs. fixed or open vs. closed. Each option is an individual decision based on several considerations.

For example, while comparing open and closed mortgages, it’s crucial to remember that open mortgages are more expensive due to the freedom to pay the loan off at any moment without incurring fees.

While fixed mortgages, such as the 5-year fixed rate in PEI, have historically been more expensive than variable mortgages. Some borrowers still prefer the security of knowing their payment would remain the same throughout their mortgage.

Your Credit Score

A credit score of at least 680 is required to be considered by mortgage lenders in PEI. To qualify for the lowest rates, borrowers’ scores should be at least 700 points, with a maximum score of 900. There are choices available for those with lesser scores, but you can anticipate higher interest rates in PEI and shorter durations in these cases.

How Compare Mortgages Works

Our mortgage advisors are usually rewarded based on customer satisfaction with the service rendered. We’re always available to help you reach your goal of owning a home while guiding you through the uneasy home financing process. 

Generally, mortgage professionals who work with borrowers are aware of the best mortgage rates in Saskatchewan. However, only a few will give you that rate without making it a hassle. Here at Compare Mortgages, we are working to change the industry and its ideologies while providing the best rate upfront.

Learn About Rates & Mortgages In Prince Edward Island 

Our Frequently Asked Questions (FAQ) section is here to help you make educated decisions on the best mortgage rates in PEI every time.

Why compare PEI mortgage rates on Compare Mortgages?

Comparing mortgage rates in PEI on Compare Mortgages guarantees that you get the most recent rate information, which can effectively help you save on your mortgage throughout your homeownership journey. 

When you are comparing mortgage rates in PEI, ensure that you evaluate similar mortgage types (variable rate vs fixed rate) and terms (three or five years) so that you are not simply looking at rates; you are comparing similar products.

Mortgage rates and features see variations based on the specific lender, therefore, you would only get a clear comparison by evaluating similar offerings. 

Are PEI mortgage rates higher than other cities?

PEI mortgages today would see variations based on the lender or bank offering the product. With Compare Mortgages’ advanced technology, we get an accurate overview of the entire market at any point in time to guarantee that you always have access to the most current mortgage rates in PEI. This way, you are able to make guided decisions about whether to leave your rate or lock it in. 

Should I get a fixed-rate or variable-rate mortgage in PEI?

The choice of a variable rate, like the 5-year variable rate in PEI or the fixed-rate mortgage hinges on how much risk you can tolerate and your level of comfort. 

If you have a preference for being able to know ahead how much mortgage payments you would be making monthly, then a fixed rate would be a good call given that payments remain the same. A fixed-rate remains the same through the term that you select (1-10 years).