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An emergency can strike your home at any moment — and usually when you’re least prepared.
While everyone knows to have a fully stocked emergency fund, having one is a different story. Between record-breaking inflation and economy-ruffling lockdowns, many Canadians are still recovering from the pandemic, with very little savings to show for it.
You can still take on essential work, even without an emergency fund at your disposal. Check out these four emergency resources instead.
1. A Home Equity Line of Credit
A home equity line of credit, or HELOC as its better known, is a convenient option for large-scale renovations. This line of credit is tied to the equity available in your home, so it can offer up a limit that’s five- or six-figures.
The difference between your home’s value and your remaining mortgage determines how much equity you have available. That means a HELOC may not be an option for new homeowners or people who have recently remortgaged their homes.
A HELOC is a secured line of credit because it uses your home as collateral. The bank or lender has the right to take your home as payment if you become chronically delinquent, so it’s important you budget for each bill.
2. An Online Personal Loan
Having zero equity is one reason to avoid the HELOC. Another is if your emergency repair comes with a relatively low price tag. A HELOC often provides huge limits that are unnecessary for patching a few curling shingles or replacing a small water heater.
That doesn’t make minor emergency repairs any easier to deal with. Luckily you can search for online personal loans in Canada that aren’t secured to your property. A lender like Fora does not use your home as collateral, or any other asset for that matter. You can fill out an application for unsecured online loans in Canada from Fora without making this kind of pledge.
Like all personal loans in Canada, you should pay your line of credit on time — with or without collateral looming over your contract. To ensure you can cover the cost of borrowing, compare rates and terms against your budget.
3. Insurance Claim
As climate change increases the number of extreme environmental events in Canada, many of us face increased risk of forest fires, storms, hurricanes, and floods. Your comprehensive homeowners insurance may be the best way to cover damages caused by extreme weather if your policy includes natural disasters.
As climate risks grow, the country’s homeowners insurance systems will evolve. If you live in an at-risk area, you may see your insurance rates rise soon. Some insurance companies have started to cut natural disaster coverage from their policies altogether.
Emergency Repairs Are on the Rise, so Prepare for Them!
Look, you could get lucky. You could avoid disaster and therefore sidestep the need to apply for a loan or insurance claim. But the stats are against you.
According to the 2023 HomeStars Reno Report, 32% of homeowners had to complete emergency repairs last year. That share jumped to 41% of homeowners in Atlantic Canada thanks to extreme weather-related events such as flooding.
Wherever you call home, an emergency repair could be just around the corner. Start saving for this essential work, but don’t panic if something goes wrong before you manage to tuck away enough cash. The four emergency financial resources shared here today are your safety net.
