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Your Guide to Getting the Best Mortgage Rates in Prince Edward Island

When you’re looking to find the very best mortgage rates in Prince Edward Island, nesto is your one-stop shop. You can always rely on us to help you better understand how to navigate mortgages in any kind of market and provide the very best interest rate upfront.

About Prince Edward Island

Prince Edward Island is one of eastern Canada’s maritime provinces, off New Brunswick and Nova Scotia in the Gulf of St Lawrence. The large island – and Canada’s smallest province – is marked by red-sand beaches, lighthouses and fertile farmland, and is renowned for seafood like lobster and mussels. 

Key facts about Prince Edward Island:

  • Charlottetown, the capital, is home to Victorian government buildings and the modern Confederation Centre of the Arts, with a theatre and art gallery
  • Charlottetown and Summerside are PEI’s only two cities. The island also has seven incorporated towns
  • French explorer Jacques Cartier discovered the island in 1534. As part of the French colony of Acadia, the island was called Isle Saint-Jean
  • In 1763, Great Britain obtained the island from France under the terms of the Treaty of Paris. The British called their new colony St John’s Island
  • On November 29, 1798, the colony’s name was changed to Prince Edward Island to distinguish it from Saint John, New Brunswick and St John’s, Newfoundland
  • Agriculture is the largest industry, with nearly half of PEI’s land dedicated to farming
  • Potatoes have been produced on PEI since as early as 1771. Today PEI grows a third of Canada’s potatoes

Learn About Rates & Mortgages in Prince Edward Island 

Welcome to our Frequently-Asked Questions (FAQ) section, where we answer the most popular questions our nesto advisors receive on a daily basis across Prince Edward Island, designed to help you make informed mortgage decisions every time you need a new mortgage or to renew/refinance an existing one. 

What are today’s mortgage rates in PEI?

Today’s mortgage rates in Prince Edward Island vary depending on the specific bank or other lender offering each product (see chart). nesto’s advanced technology empowers us to take a snapshot of the entire market at any given time to ensure you always have the latest rate information at your fingertips to help you make the most informed decisions about whether to stay the course or lock in your rate.

Why compare Prince Edward Island mortgage rates on nesto?

By comparing Prince Edward Island mortgage rates on nesto, you’re always getting the most up-to-date information, which helps you save money throughout your time as a homeowner.

When comparing rates, be sure to look at similar terms (such as three or five years) and mortgage types (fixed rate vs variable rate) so you’re measuring similar products and not looking solely at rates. Mortgage rates and features vary by lender so, in order to gain an accurate comparison, you have to look at similar offerings.

Should I get an open or closed mortgage in Prince Edward Island?

Whether you should select an open or closed mortgage in Prince Edward Island depends on your specific life and financial circumstances. 

When looking at open vs closed mortgages, it’s important to note that open mortgages are priced higher because of the flexibility they offer to pay the mortgage off at any time without facing a penalty. If you have no need to pay the mortgage off quickly, it makes sense to select a closed mortgage and benefit from lower rates.

Should I use a mortgage broker or lender in Prince Edward Island?

A mortgage broker is a professional who can negotiate the best mortgage by comparing all the offerings from multiple lenders, including banks, credit unions and trust companies, as well as alternative and private funding specialists. In other words, the mortgage broker acts as an intermediary between the borrower and the lender.

A mortgage lender is one financial institution or bank that offers a single line of mortgage products direct to borrowers. The lender’s mortgage specialists only have access to their own mortgage products. 

nesto provides the choice of multiple lender products much like what’s provided through a mortgage broker, but nesto advisors offer the lowest rate upfront every time. Yes, we make less than the average broker or mortgage specialist, but we get the peace of mind knowing that we helped you save thousands of dollars on your mortgage.

Should I try to find a mortgage with a rate hold in Prince Edward Island?

If you’re planning to buy Prince Edward Island property in the future, it’s a wise choice to request that nesto secure a rate hold on your behalf so you don’t have to worry about interest rates rising while you’re home shopping.

Ensuring you have a rate hold in place is like having insurance on your mortgage rate – you no longer have to worry about mortgage rates increasing while you find your new home over the next 90-120 days.

About the Prince Edward Island Housing Market

Following the initial impact of COVID-19 on PEI’s housing market, the months of May and June saw the biggest change with activity increasing toward somewhat-normal levels. Given the PEI government’s ability to flatten the curve quickly and efficiently, real estate prices in Charlottetown a

While rampant price inflation is a serious issue for both the eastern seaboard and the rest of the country, the last two years have also led to a broader economic boom. A population surge, economic revitalization and a red-hot real estate market are the gains that Prince Edward Island and its regional neighbours have experienced throughout the COVID-19 pandemic.

Prince Edward Island real estate values are continuing to grow as showcased by an 18% annual gain in January 2022 to $351,890. 

First-Time Home Buyer Programs in Prince Edward Island

There are several first-time home buyer incentives and programs available in Prince Edward Island that were designed specifically to help lighten the financial burden for first-time home buyers. These programs will offset some home buying costs as well as help fund your down payment, which is often one of the biggest hurdles involved in buying your first home. See:First-Time Home Buyer Programs in Canada

What are the Different Types of Mortgages?

Open vs Closed Mortgage

With an open mortgage, you’re able to prepay any amount of your mortgage at any time without facing a prepayment penalty. The compromise for having an open mortgage is that interest rates are higher to make up for the flexibility of being able to pay it off at any time.

With a closed mortgage, on the other hand, the interest rate is more attractive than a closed mortgage because you’re limited by how much extra you can pay towards your mortgage each year. So, the compromise here is that you’ll face a prepayment limit. This means that you’re only permitted to pay a certain percentage of your original or current balance per year – often 15%, on average, but this varies between lenders. If you have the choice, be sure to always opt for the original balance prepayment option as it will enable you to pay off more in a year. And if you choose to pay more than your annual limit, you’ll receive a prepayment penalty. It’s important, therefore, to be aware of your limits and stay within them.

Fixed Mortgages

Fixed-rate mortgages make up 70% of all mortgages in Canada. A fixed-rate mortgage keeps your interest rate steady over the term of your mortgage (1-10 years). There’s no doubt that the five-year fixed-rate mortgage is the most common choice selected by Canadian homeowners. But, this isn’t the best option for everyone, regardless of its popularity. Fixed-rate mortgages appeal to homebuyers who are looking for a dependable payment schedule, manage a tight monthly budget or are generally more conservative. For instance, Millennials with large mortgages relative to their income may be better off opting for the peace of mind provided by a fixed rate and payments.

Variable interest rate mortgages

A variable interest rate can increase and decrease during your term. If you choose a variable interest rate, your rate may be lower than if you selected a fixed rate.

There are two types of variable mortgages: a) Variable rates with Fixed payments and b) Variable rates with Adjustable payments

Fixed payments with a variable interest rate

In general, under this option, the payment remains fixed over time despite variations of the interest rate.

If the interest rate goes up, more of your payment goes towards the interest, and less to the principal.

If the interest rate goes down, more of your payment goes towards to the principal. This means, you pay off your mortgage faster.

That being said, if the market interest rates increase to a certain percentage or trigger point, your lender may increase your payments. This payment increase will make sure that you pay off your mortgage by the end of the amortization period. The trigger point is listed in your mortgage contract.

Adjustable payments with a variable interest rate

With adjustable payments, the amount of your payment changes if the interest rate changes. A set amount of each payment applies to the principal. The interest portion changes as the interest rates change. You’ll know in advance how much of the principal you’ll have paid at the end of the term.

Land transfer tax in Prince Edward Island

Land transfer tax is referred to as Real Property Tax in Prince Edward Island. It’s applicable to all property purchased including land, land covered by water, land with buildings situated on it, bulk storage tank, and structures other than buildings such as equipment, installment and tower. 

The buyer of real property must file an Affidavit of Purchaser with the Registrar of Deeds and pay a tax at the time of registration, which is charged as 1% of the higher of the purchase price or assessed property value.

What Affects My Mortgage Rate in PEI?

Factors such as credit score and income play a big part in qualifying for the lowest interest rate in Prince Edward Island. The riskier a borrower appears, the higher the interest rate can be. Rate is definitely not the most important aspect of a mortgage, however, as many rock-bottom rates often come from no-frills mortgage products. In other words, even if a borrower qualifies for the lowest rate, they must often give up other features such as prepayments and porting privileges when opting for the lowest-rate product.

There are many other ways to save money over the mortgage term instead of taking the lowest rate, including rounding up mortgage payments or making lumpsum payments when bonuses, etc are received throughout the year. It’s important, however, not to exceed the allowable limit on annual extra payments with your lender.

Down Payment

The size of your down payment will determine whether you must also pay mortgage default insurance in addition to your regular mortgage payments. Mortgage default insurance is required any time you make a down payment that’s less than 20% of the property’s value.

Amortization Period

If you select a longer amortization period (the maximum is 25 years on mortgages with less than a 20% down payment and 30 years on mortgages with down payments of 20% or higher), your individual mortgage payment will be lower because they’re spread out over a longer period of time. Longer amortizations can come equipped with higher interest rates. You’ll also pay more interest the longer you take to pay off your mortgage.

Property Usage

If you’re buying a home that you personally intend to live in, this is considered your primary residence and is known as owner occupied. If you’re buying an investment property that you intend to rent to others, you’ll pay higher interest rates than on your primary residence. The logic behind this is that people will pay the mortgage on their primary residence before any rental properties. As such, lenders build added risk into the rates for rental properties.

Mortgage Type

The type of mortgage you select – such as variable vs fixed and open vs closed – will play a role in your mortgage rate. Each selection is a personal choice based on a number of factors.

When looking at open vs closed mortgages, for instance, it’s important to note that open mortgages are priced higher because of the flexibility they offer to pay the mortgage off at any time without facing a penalty.

And while variable mortgages have proven to be more cost effective over time than fixed mortgages, some people prefer the certainty of having the same payment throughout the mortgage term as is the case with fixed mortgages.

Your Credit Score

The ideal candidate for a traditional mortgage lender has a credit score that’s 680 and above. The higher the score is above 700 the better – with a maximum score of 900 possible – as borrowers will qualify for the lowest rates. There are options available for people with lower scores as well, but you can expect rates to be higher and terms to be shorter in these circumstances. nesto has strict lending guidelines that require a minimum credit score and a no recent payment missed.

How nesto Works

At nesto, it’s our mission to find you the very best mortgage rate upfront in the most simple, transparent, and fast way. Thanks to our advanced technology, we’re able to evaluate the whole market in seconds to find the most affordable mortgage while our commission-free experts provide you with unbiased support throughout the process.