How Smart Thermostats Can Cut Down on Housing Costs

It’s summertime! In southern Ontario where I live, that means lots of heat and humidity; so it’s time to turn on the air conditioner.

Stepping inside to a cool, air-conditioned home is a wonderful feeling on a 30º day, but electricity is expensive in this part of the world. Based on Toronto Hydro’s time of use rates, running a 4-ton 16-SEER central air conditioner for one hour costs approximately 83¢. Even in off-peak times, an hour of air conditioner use comes close to 50¢ – enough to add hundreds of dollars a month to a hydro bill.

Many homeowners simply set their thermostat to a comfortable temperature around 20º and leave it there all summer, but it’s an inefficient strategy. During the hottest hours of the day (which are often the hours when people aren’t home), the air conditioner is working hard to maintain a cool temperature.

Personally, I try to conserve where I can. I try to only run the air conditioner for a few hours at night to make it comfortable for sleeping, and I set the thermostat to a reasonable temperature (I admit it’s set a little colder than the balmy 25º the experts recommend). It’s more energy efficient to cool my home when it’s needed, and let it warm up a bit during the day.

It’s not always convenient to constantly adjust your thermostat by hand, however. A simpler method would be to use a smart home thermostat. These devices learn from your behavior, so they can automatically adjust the temperature to keep you comfortable when you need it and save energy when you’re not home. Many even calculate how long it takes your system to heat or cool your home and adjust to make sure it’s always just the right temperature for you at key times, like when you get home and when you go to bed.

The energy savings from a smart home thermostat can add up. According to Natural Resources Canada, you can save at least 8% of the energy used for home heating and cooling by switching from a manual thermostat to a smart thermostat.

Can smart home thermostat savings help me buy a home?

Mortgage lenders don’t care if you sweat in the summer, but they want to make sure you don’t freeze in the winter. That’s why the cost of heating your home is a factor in how much money you can borrow to buy a home.

So, can switching to a smart home thermostat help you afford a bigger house? Let’s do the math.

There are a few criteria considered in determining how big of a mortgage you’ll be allowed to get. If you have good credit, you’ll usually be allowed to use up to 39% of your pre-tax income toward your mortgage payment, property tax, heating costs, and half of any condo fees.

If you have a healthy household income of $100,000, you can spend up to $3,250 per month on housing costs. Assuming property taxes of $300 per month and electric baseboard heat costing an average of $500 per month, Ratehub’s mortgage affordability calculator shows there’s enough money left over to support a $408,000 mortgage with a 5-year fixed rate of 3.19% amortized over 25 years.