Financing a roof replacement

A roof is the classic unplanned four-figure-to-five-figure home expense: it fails without warning, it cannot be deferred, and the people quoting it know you have no leverage. That combination is why roof replacement is one of the most commonly financed home repairs, and why the financing terms deserve as much attention as the roofing quote itself.

Source: Statistics Canada table 326-0020, monthly, not seasonally adjusted. These are indexes, not prices: an index shows how the cost of a category has moved, not what the work costs.

Start with the published cost context

Roofing has no official price series either, but the cost of the work is driven by materials and energy, and those we can show from published data. The Canadian series below is published by Statistics Canada at national and provincial level, which is the only official sub-national construction-price data available in either country.

Source: Freddie Mac Primary Mortgage Market Survey, as published at freddiemac.com/pmms. National averages for conforming loans; your rate depends on credit, points, loan size and property.

Mortgage rates set the price of the cheapest borrowing

If you have equity, a secured product is normally cheaper than an unsecured one, because the lender can recover the debt from the property. That is a material fact, not an endorsement: secured borrowing puts your home at risk if you cannot repay. Freddie Mac publishes the national average mortgage rates that secured products are priced against.

The four financing routes

**Contractor financing.** Convenient, arranged at the kitchen table, and usually the most expensive per dollar. The contractor is paid a fee by the finance company, which is built into your rate. Ask what the cash price is.

**A home equity loan or line of credit.** Cheapest per dollar if you have equity and qualify, because it is secured. Closing costs may apply, and the lender can take the home if you default.

**A personal loan.** Unsecured, fast, fixed term. More expensive than secured borrowing and usually cheaper than contractor financing.

**A credit card.** The most expensive option by a wide margin unless the balance is cleared inside a promotional window. Use it for the deposit at most.

• Get three written quotes that itemise tear-off, disposal, underlayment, flashing and permits separately.
• Ask each contractor for the cash price and the financed price — they differ.
• Confirm who holds the warranty and whether it survives a change of owner.
• Check the contractor's licence and insurance in your state or province.

How to compare roof quotes so they are actually comparable

Roof quotes are deliberately hard to compare because contractors itemise different things. Ask every contractor for the same eight lines: square footage, number of existing layers and their removal, underlayment product, flashing replacement, ventilation, decking replacement priced per sheet, permit handling, and the disposal method. A quote missing three of those is not a lower price, it is an incomplete scope, and the missing work reappears as a change order once the roof is open.

Pricing decking replacement per sheet is the single most useful line to demand, because rotten decking is the most common surprise on a re-roof and the most commonly marked up. Get the unit price in the contract.

The financing trap in home improvement

Two contract structures cause almost all of the complaints in this category. The first is the contractor who arranges financing and pays off the loan themselves, so that you owe the finance company from day one regardless of whether the work is finished. The second is a lien: in many jurisdictions a subcontractor or supplier who is not paid can place a lien on your property even though you paid the contractor in full.

Protect against both the same way: ask for a signed lien waiver or its equivalent from every subcontractor and supplier at each payment stage, and structure payments against completed stages rather than dates. A deposit of a third with the balance on completion is normal; paying the full amount up front is not.

Insurance, and the order to do things in

If the damage came from a storm, hail or a fallen tree, the insurer's adjuster sets the scope and the contractor prices against that scope. Signing a contract before the claim is filed hands the scope to the contractor and can reduce what the insurer pays. File first, get the scope in writing, then get quotes against it.

If the roof is simply worn out, no policy covers it, and the whole cost is yours. That is the case in which the financing comparison above decides whether the job costs you a few hundred dollars of interest or a few thousand.

Three mistakes that cost the most

**Paying a deposit before the scope is fixed.** A deposit on an undefined scope buys nothing and weakens your position if the numbers move. Fix the scope, then pay the deposit.

**Choosing the contractor on price alone.** The lowest quote is frequently the one with the most exclusions, and the exclusions are discovered after the old roof is off. Compare scopes, then prices.

**Financing on the contractor's terms without a cash-price comparison.** Ask for both prices in writing. If the contractor will not give a cash price, that is information too.

What actually changes the price

Roof size and pitch, the number of layers to be removed, the material chosen, whether decking must be replaced, and access. A quote that does not state these is not comparable with one that does.

Insurance sometimes pays: storm, hail and fallen-tree damage are commonly covered. File the claim before signing anything, because the insurer's adjuster sets the scope.

Where these figures come from

Related pages

• Roofing costs by state and province
• Loan payment calculator
• Total cost of ownership calculator