The roof is one of the more difficult parts of the home to price out for renovations. Does it only need a few replacement shingles or a complete overhaul? If the answer is the latter, you might need financing.
In Canada, the average asphalt roof replacement can run around $4,500. You may not have this money right away, but you may also not be able to wait for the work to get done. How can you finance your roof replacement?
Start By Getting Your Quote
You have several options, but everything starts with a quote. Find out if you’ll require financing by estimating how much the roof replacement will cost. Get quotes on your new roof or repairs from more than one roofer, and if there are significant differences among the quotes, try and sort out why that would be the case.
Once you have a price estimate for your roof, you can assess each financing option to see if it would adequately cover the total cost.
Check Your Home Insurance
Before looking anywhere else, you should determine if your homeowner’s insurance policy or any limited warranties offer coverage for any damage your roof has suffered. If insurance covers all or part of the costs, you may not need to look elsewhere.
Don’t be surprised if the company sends somebody over to check your roof and take pictures of it. Insurers want to determine the condition of your roof before the damages, meaning they’ll want to inspect every part of your roof, inside and out.
Home Equity Line of Credit (HELOC)
After insurance, a home equity line of credit (HELOC) or home equity loan is the best way to finance your roof replacement. HELOCs have low interest rates, making them less costly than credit cards and personal loans. It’s the ideal option if you have a poor credit rating or want to minimize the impact the work will have on your interest rate.
With a HELOC, the equity you have in your home becomes collateral, and it will provide you with a credit supply that you can decide how much you need when you need it. You then repay the credit when you are able.
Your last resort, unless you anticipate paying off the amount in full at the end of the month, should be the credit card. Otherwise, the interest rate can add a lot of money to your roof replacement. Even if the credit card has a low interest rate – say, 15%, with a monthly minimum payment of around $200 – this can add an extra $3,000 on top of the cost of your roof if you only pay the minimum.
Compare Your Financing Options
Don’t take the first opportunity for financing; always make the wisest choice for your needs. Ideally, you would choose the option with the lowest interest rate, so you pay the least for your roof in the long run.
Consider not just the interest rates on offer but other costs associated with the financing as well. Think about how long it will take you to secure the money. If you need a completely new roof, you may not be able to wait for some of the financing options available to come through!