Prince Edward Island Mortgage Payment Calculator 2024
| Total Cost: | $842,939 |
|---|---|
| Principal | $475,000 |
| Interest | $367,939 |
| CMHC Mortgage Insurance | $19,000 |
| CMHC is mandatory for you | |
Land Transfer Tax | $5,000 |
The Atlantic Canadian province of Prince Edward Island (PEI) is the smallest province in Canada, covering only 0.1% of the total area of Canada (source: Statistics Canada). As per the census data of 2021, Prince Edward Island’s population in 2021 was 155,331, an increase of 8% compared to 2016. This is the highest percentage growth of all provinces in Canada. With a GDP at market prices of 8.6B, PEI accounted for 0.34% of Canada’s income-based GDP in 2021. In 2020, the median after-tax income in PEI was $59,400, $7,400 less than the national median for the year.
Prince Edward Island House Prices
The average home price in PEI for the month of October 2022 was $357,521, a drop of 3.2% compared to October 2021, but an increase of 20% compared to October 2020. The average home price in PEI was about $287k less than the national average of $644,643 for the month.
The PEI housing market is one of the most affordable housing markets in Canada. It is significantly cheaper than the Ontario housing market and the British Columbia housing market which had average house prices of $835,090 and $932,979 in October 2022 respectively. The average home prices in PEI are slightly higher than the neighboring province of New Brunswick where the average home price in October 2022 was $266,204 and similar to the average price in Nova Scotia where the average home price was $385,756 in the same month.
In October 2022, the number of sales dropped by 22.6% compared to a year ago, following the Bank of Canada rate hikes and the consequent surge in mortgage rates. The average houses in PEI are priced well under $500,000 and qualify for CMHC mortgage insurance, while requiring only 5% down payment.
Closing Cost in Prince Edward Island
It is best to account for closing costs before you buy a house as some of these closing costs can be a significant amount and most of them need to be paid upfront. Similar to other provinces, the main closing costs that buyers can expect to pay in PEI are:
- Real Property Transfer Tax,
- Legal Fees,
- Property appraisal fees,
- Property survey fees,
- Title insurance,
- Government registration fees, and
- Home inspection costs
Land Transfer Tax in Prince Edward Island
Land transfer tax is known in the province as the “Real Property Transfer Tax”, and covers all types of real property purchases in PEI. This tax is paid at the time of registration, and is charged at a flat rate of 1% of either the purchase price, or the appraised value; whichever is higher. This tax does not apply to any property with a value below $30,000.
For example, if you buy a house worth $300,000 in PEI, the land transfer tax will be – $300,000 x 1% = $3,000
First-Time Buyer Incentives in Prince Edward Island
PEI’s First Time Buyer Transfer Tax Exemption
First-time homebuyers in PEI are exempt from paying the real property transfer tax. To qualify for this exemption, the applicant must have resided in the province for at least 183 consecutive days before the deed registration. Alternatively, if the buyer occupies the home as their principal residence for 183 consecutive days after the deed registration, they can apply for a refund of the tax.
PEI’s Down Payment Assistance Program
To help first-time buyers with down payments, the government of PEI’s Down Payment Assistance Program (DPAP) offers an interest free loan for up to 5% of the purchase price. The maximum available loan amount is $17,500. To qualify, the buyer must have an annual household income below $95,000, and the purchase price of the home should be below $350,000.
Cost of Living and Inflation in Prince Edward Island
Similar to the other Atlantic Canadian provinces, the cost of living in PEI is fairly low compared to the more populated provinces like Ontario, British Columbia and Quebec. The average monthly rent for a two-bedroom apartment in the province is about $989. In comparison, the average monthly rent of a two-bedroom apartment in Ontario is $1,680 and that in B.C. is $1,830. The food expenses in the province are also among the lowest in the country, with the average monthly food expenditure in the province being $308.
The inflation rate in PEI was the highest of all provinces in Canada for the month of November 2022. Despite the inflation rate in Canada having slightly reduced by 0.1% compared to the previous month, the inflation rate in PEI increased to 9.7% in November 2022 from the 8.7% in the previous month (source: Statistics Canada’s Consumer Price Index data). Higher prices of fuel are believed to be driving this inflation, given that fuel oil is commonly used for heating homes in the region.
Property Taxes in Prince Edward Island
Property taxes help municipalities cover the cost of municipal services such as public transport, garbage collections, police, fire department and schools. Homeowners are required to pay property taxes on an annual basis and the tax rates are determined every year based on the annual budget requirements of the city. This tax rate has two major components – the municipal tax rate and the educational tax rate. The property tax rate for Charlottetown for the year 2022 is 1.67%.