Should you rent or buy on PEI. Basically renting gives you little financial exposure to risk, and only a very short-term commitment to living in one place which can be useful if your life is not well defined and may change. Additionally you are protected from unexpected expenses.

Renting usually means that your monthly payments are less than they would be if you had a mortgage, however this has been somewhat mitigated by lower interest rates. Renting does not of course require a down payment. The most you will have to find "upfront" is the first months rent plus a damage deposit of a maximum of another month - 2 months rent and you're in. While you have to make sure as different leases will have different terms, generally utilities such as oil and electricity are included which means that not only do you not have to budget for these separately but if your credit is not stellar you will not have the problem of setting up accounts with your local utilities.

Of course renting has its downsides and these tend to show owning at its best. Rent can go up, particularly if your rent includes utilities. Also you will have to accept the décor as is and will not have the freedom you would have with your own home to change paint, wallpaper and carpet.

While you are not responsible for repairs and maintenance when you are renting you are also dependant on the landlord to perform those repairs that are required in a timely and proficient manner, which may not always happen.

However the most important downside to renting and conversely upside to buying is that for a very small extra amount per month you are creating equity in a property. If you are renting you are simply creating equity in a property for your landlord. In PEI, as PEI real estate is generally much cheaper than in other provinces, this situation is even more exaggerated. In some provinces with the cost of real estate a landlord investor will be lucky to make his or her mortgage from the rent. In PEI you will most likely, if you are selective about the property that you invest in, be able to create a positive cash flow. This advantage to PEI landlords is a disadvantage to PEI tenants.

The primary reason that you should buy a home or other PEI real estate is of course to build up equity in a property. Real estate has historically proved to be a good investment and to invest and be able to live in the home while using it like a savings account is the double whammy advantage to home ownership.

In addition to building equity, the home purchase also acts as a hedge against inflation. It is a way to hold your own again the certain knowledge that the cost of living continues to increase. So you are building up a retirement fund. You are putting money into paying off your property while that property increases in value providing security for the future.

With low-downpayment, equity building, the advantage of tax-free capital gains, the advantage of living in a more stable neighborhood, increased freedom to make the home suit you, the advantages of homeownership far outweigh any disadvantages. As a homeowner you will be looked upon by lenders as a more stable risk and home ownership will be the first step on your road to financial independence.

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