The island is gorgeous, the communities are super friendly, and honestly, it’s one of the more affordable places to live in Canada, but should you buy or rent?. But how do you know if renting or buying is the better move? Let’s break it down in the simplest way possible.
Why Renting Might Be Your Best Move
If you think that you may have to move again in the near future, possibly because you are a newcomer to Canada, then renting is ideal. Also the cost to get into a home or apartment is much cheaper if you rent, you will need first month and a damage deposit. However if you are buying you will need a downpayment of at least 5%, plus lawyer and closing costs.
Renting also means way less responsibility. When appliances or other aspects of the home break or need maintenance the landlord must take care of it. It’s great for people who don’t want to deal with fixing things.
If you’re thinking about living in Charlottetown or Summerside, renting is the best way to get into the market as homes to purchase in these areas tend to be the most expensive.
Why Buying Might Be a Better Idea
Buying a home is more of a long-term play, but it can really pay off if you’re ready to settle down. The biggest perk? You’re not just throwing your money at rent every month. Each payment means that you are owning a little bit more of the property. Down the road, you will be able to cash in!
Owning also means you get to make the place totally yours. Want to paint a mural on the living room wall or start a veggie garden in the backyard? Go for it. No landlord rules here. Plus, if you plan to stay on PEI for a while, owning gives you that solid, settled feeling.
Even though house prices have gone up a lot in the past few years, things are starting to chill out. And compared to the rest of Canada, PEI is still pretty affordable. Bonus: If you buy a house with a basement apartment or an extra unit, you could rent it out and make some extra cash to help with your mortgage.
However there may be other options
The Rent-to-Own Pilot Program offers PEI residents with modest incomes the chance to transition from renting to homeownership for eligible homes valued up to $350,000, including HST. Applicants must meet specific criteria, such as not owning a home, being a Canadian citizen or permanent resident, residing in PEI, having a household income of $100,000 or less, and providing evidence of a recent mortgage application decline. Eligible properties must be pre-existing single-family homes, located in PEI, and serve as the applicant’s principal residence. Under the program, Finance PEI purchases the home, and participants enter a five-year Rent-to-Own Agreement, during which a portion of their rent payments accrues as a credit toward the down payment or purchase price. Participants can exercise their purchase option at any time during the agreement, provided they maintain good standing.
If you can qualify for a mortgage but you are a bit light in terms of down payment you should check out the Down Payment Assistance Program (DPAP). It is a pilot initiative designed to help modest-income residents of Prince Edward Island purchase their first home by offering a conditionally interest-free loan of up to 5% of the home’s purchase price, with a maximum loan amount of $17,500. This loan, which must be used exclusively for the down payment, accrues interest at a fixed rate of 5% annually, forgiven once the principal is fully repaid, and allows participants to defer payments for the first year to accommodate unforeseen costs. Eligibility requires applicants to be Canadian citizens or permanent residents, first-time homebuyers, have a household income of $100,000 or less, and purchase a principal residence on PEI valued at no more than $350,000. The property must be a single-family dwelling, and applicants must demonstrate they cannot afford the 5% down payment independently, have a satisfactory credit rating, and no defaulted debt with the PEI government.
Things to Think About Before Deciding
Before you jump into renting or buying, think about your money situation. Can you handle all the costs of buying, like a down payment and property taxes or would it be more financially prudent to save more and rent in the meantime?
Also, think about how you like to live. Are you all about freedom and flexibility? Then renting might be your jam. Or are you ready to settle down and make a place your own? If so, buying could be the way to go.
And don’t forget about what’s happening in the market. Some places on PEI are still super hot, while others are cooling off. If you’re not sure what’s up, chat with someone who knows the local market (like, say, a Century21 agent).
Finally, think about how long you’re planning to stay put. If you’re not sure where you’ll be in a year or two, renting is probably smarter. But if you know you’re sticking around for the long haul, buying starts to make a lot more sense.
So, What’s the Deal?
There’s no one-size-fits-all answer here. If you’re just getting started or want to keep things flexible, renting is probably the best move for now. But if you’re feeling ready to settle down and start building some wealth, buying a home could be the perfect next step.
No matter what you decide, the team at Century21 is here to help. Whether you’re looking for a sweet rental or ready to find your dream home, we’ve got your back.
Hit us up today and let’s figure out what works best for you. PEI is waiting for you!