Budgeting for Major Unexpected Home Repairs
Many homeowners are financially unprepared for an emergency home repair and have little to no money set aside to cover such an occurrence.
This is according to a new survey by Leger Opinion on behalf of Service Line Warranties of Canada.
What’s more, the majority of homeowners are unaware that they would be responsible for one of the more common repair emergencies — failing water or sewer lines that connect their home to municipal systems. These types of repairs are rarely covered under standard homeowners’ insurance.
This unpreparedness is especially concerning since the survey also found that more than one-third of homeowners had a home repair emergency in the past 12 months. Common home repairs included blocked and/or overflowing toilets, leaking water pipes, and leaking or blocked exterior water and sewer lines.
But the homeownership repair challenges don’t end there. One-third of homeowners reported having trouble finding a contractor to complete a repair and half said they had a problem with the contractor they hired. The most common issue is the job ends up costing more than initially estimated.
So, how much should you set aside in an emergency fund?
A good rule of thumb is to budget for about 5% of your annual income.
This will ensure you have enough cash set aside to cover a costly fix that requires immediate attention like, for instance, broken windows, a damaged or leaky roof, burst pipe, appliance repair or replacement, pest damage, water heater problems (if owned) or a defective furnace.
And if you’re looking for a reputable contractor, ask for a referral from someone you trust, such as a family member, close friend or Realtor. Alternatively, HomeStars is a good place to start. The free website helps you find and connect with verified and community-reviewed home service professionals in your local area.