How Financing a Furnace Can Affect Your Mortgage

“Save up to $3,000 on heating and cooling”

“No monthly payments for 3 months” 

“No interest for 6 months”

Sound familiar? You’ve probably seen tons of offers like these on flyers and emails from your utility company. It sounds great on the surface. You can save some money, lock in low monthly payments, and avoid spending thousands of dollars at once on a furnace or air conditioner. 

If it all sounds too good to be true, it’s because it is. 

Most homeowners don’t realize that when you finance a heating or cooling unit, the utility company will register a lien on your home. In some situations, this could be harmless. But in others, it could cause issues.

How Could This Affect Me?

If you’re considering new mortgage options, you’re likely in a situation where you need to act fast. A lien on your home could complicate and draw out the process, especially if you didn’t even know the lien existed. 

Your lawyer might have to request a payout from the finance company. Or, they might ask to postpone their lien to your mortgage. In either scenario, finance companies aren’t quick to offer up solutions. You could find yourself in a situation where your property or refinancing doesn’t close on time – all because of a furnace.

How Do I Avoid Getting Into This Situation?

If you can swing it, try to pay cash up front for your new air conditioner or furnace. This is the easiest way to avoid a costly situation like the one described above. Alternatively, you could get a secured line of credit for up to $20,000, or an unsecured line of credit for an even lower interest rate. Either of these options beat out a lien on your home that could cause you headaches. 

If you’re still not sure which way to go, talk to your mortgage specialist. They’re usually experts on every aspect of homebuying (yes, even furnaces).

Your best interest is my only interest. I reply to all questions and I welcome your comments. Like this article? Share with a friend.

Steve Garganis: 416-224-0114; steve@canadamortgagenews.ca