TORONTO, ONTARIO--(Marketwire - Aug. 14, 2012) - One of the most challenging aspects of home ownership is facing unexpected maintenance costs. When calculating monthly expenses to maintain a home, it's important to include not only everyday costs such as mortgage payments, utilities and property taxes, but also to factor in possible home repair expenses.
According to a survey conducted by Statistics Canada, the most common home repairs are done on plumbing fixtures, patios, fences and driveways, heating and air conditioning systems, and painting the interior or exterior of one's home.
"Making home upgrades can add significant value to a home; however, it's crucial that homeowners plan ahead for costs associated with unexpected repairs," said Frances Hinojosa, Mortgage Expert, BMO Bank of Montreal. "Renovation projects come in different shapes and sizes and often occur out of the blue. Contributing small amounts to an emergency fund for repairs can go a long way in preparing for unforeseen expenses."
A portion of the monthly homeowner association fee, or condo fee, paid by condominium owners in Canada, is earmarked for a reserve fund to cover anticipated costs of repairs. Condo fees are based on the size and location of the condominium; For example, the average fee in Ontario is $300-$350 per month.
Ms. Hinojosa suggested that with half of Canadian homeowners (51 per cent) planning to renovate their homes, they should treat their house like a condo. By adding in the cost of a reserve fund to the monthly household budget, homeowners can prevent a financial blow from unplanned additional costs.
BMO offers the following financial tips to Canadians looking to make home repairs:
- Understand how a renovation will impact the value of your home by researching which renovations create increased value and are popular selling features.
- Think long term when making financial decisions - whether you are using savings to renovate, or borrowing the money take the time to meet with a financial expert to ensure your renovation meets your long term financial objectives. Using a tool like BMO MoneyLogic makes it easy to set your financial goals and keep track of your progress along the way.
- Expect the unexpected - be financially prepared for the unexpected such as a leaky roof, broken pipe or problem with your furnace that may occur during a project. A Tax-Free Savings Account (TFSA) can bring you one step closer to being prepared for an unexpected home repair by allowing savings to grow tax-free. TFSAs allow Canadians to save and invest up to $5,000 per year without paying tax on any interest earned, or withdrawals.
- Get renovation quotes in writing and understand what guarantees they provide - for example, if the cost of the plumbing in your renovation is more work than expected, will the quote go up?
About BMO Financial Group
Established in 1817 as Bank of Montreal, BMO Financial Group is a highly-diversified North American financial services organization. With total assets of $525 billion as at April 30, 2012, and more than 46,000 employees, BMO Financial Group provides a broad range of retail banking, wealth management and investment banking products and solutions.