Can you afford a costly repair?

sad worried man in stress with piggy bank in bad financial situationTimes are tough and a 2014 Manulife Financial survey discovered 46% “of Canadians ages 25 to 34 surveyed said they are worse off financially than they were two years ago, while nearly 40% of those 35 to 44 report the same.”

Homeowners work hard for their money and it’s no secret that the expense of owning a home adds up over time. A 2012 poll for one of Canada’s big banks found that “45% of those surveyed said they had no fund set up to deal with emergency expenses.” Ontario and Alberta residents were least likely to have an emergency fund. With borrowing more difficult, obtaining credit harder to achieve and many of those eligible for retirement unprepared, expensive repairs are just not in the budget.

When evaluating monthly expenses, such as a water or sewer line warranty program, it’s important for a homeowner to consider what they have in savings and what they can honestly afford each month to protect their investment. For homeowners living paycheck to paycheck, a few dollars a month to provide peace of mind could outweigh the risk of “if” a failure would ever occur, considering so few homeowners have a rainy day fund.

If you’re evaluating whether or not to purchase warranty protection, consider the following factors:

  • Do you have savings to adequately cover an unexpected $2,000 repair?
  • Could you sell belongings quickly to help cover the cost of an expensive repair?
  • Could you apply for a loan in an emergency and know you would get approved? As more homeowners struggle to make payments, credit has become more difficult to secure.
  • Would you have to refinance your home to cover the cost of repairs?

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