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If you're like most people, you probably believe that the most energy-efficient furnace is obviously the best. In terms of fuel consumption, you would be right, but there are other factors to consider: initial cost versus potential savings; repair and maintenance costs; and features that would best fit your needs.

Basically, there are three types of furnaces: conventional, mid-efficiency and high-efficiency. These classifications indicate their level of fuel economy as well as their features. If you're in the market for a new furnace, it makes sense to know what their advantages and disadvantages are before you make a choice.

Conventional furnaces are typically 75 to 80% efficient; mid-efficiency units run at 80 to 90% efficiency; and high-efficiency furnaces operate in excess of 90% efficient. These figures represent the approximate amount of fuel that is actually used to heat the house; the rest is vented to the exterior as combustion by-products.

Some features are common to all new furnaces, such as the electric ignition that has replaced continuously-lit pilot lights.

But there are some significant differences, as well. Conventional furnaces and some mid-efficiency furnaces use a draft hood system, which has a fixed damper. This means that heated air escapes up through the exhaust flue, even when the furnace is not running, resulting in lower efficiency.

Some conventional furnaces are equipped with an electric damper. This damper adjusts itself automatically so that it is open when the furnace is operating, allowing exhaust to be vented to the exterior, and closed when the furnace is not operating to help prevent heat loss.

Some mid-efficiency and all high-efficiency furnaces have induced draft fans that force the products of combustion through a small vent directly to the outside. These units are called direct-vent furnaces.

Direct-venting has several advantages. First, there is a smaller quantity of heated air that can be wasted, since the physical dimensions of the venting system is smaller than a chimney opening.

Second, there is no need for a chimney. This is often a primary reason for choosing this type of furnace. It frees up your flue for another use, such as installing or re-opening a fireplace. It also gives you the option of re-locating the furnace away from the chimney to accommodate a different basement layout.

And, direct-vent furnaces can save you about $400 on the installation of a metal chimney liner, because the Building Code now requires liners for all furnaces that vent through chimneys. This ancillary cost should be taken into account when estimating the cash outlay for your new heating system.

High-efficiency furnaces are also called condensing furnaces. Their heat exchangers extract most of the heat contained in the combustion by-products before it is exhausted, greatly improving efficiency.

But while there are obvious cost savings associated with improved efficiency, this type of furnace is not without its drawbacks. Collecting and disposing of the condensation can cause complications, such as corrosion of the heat exchanger or leakage in the vent pipes.

And because condensing furnaces are more complicated than conventional furnaces, there is theoretically more potential for failure. For example, it is not uncommon for the induced draft fan motor to need replacing within five years, at a cost of about $200-$250. That could wipe out any potential savings you might have realized through lower heating costs.

Another consideration is the type of house you live in. If you have a small, well-sealed home with a low annual fuel consumption (say, a typical post-war bungalow), it would be hard to justify the extra expense and potentially higher maintenance costs often associated with a high-efficiency unit.

But if you live in a large, drafty, poorly insulated house with a high annual fuel consumption (say, an old 3 storey brick turn of the century home), the long-term savings from fuel economy may well warrant the greater cost of purchasing a high-efficiency model.

After you decide what energy-saving features will give you the most for your dollar and choose the type of furnace you want, make sure that it is properly sized for your home. Ideally, a heat loss calculation should be performed to take into account changes that may effect your heating requirements, such as new windows or improved insulation.

Don't get one that is bigger than you need. A furnace or boiler operates at peak efficiency when it has been running long enough for all its components to reach their normal operating temperature. If the unit is too large, it will cycle repeatedly, heating up the home very quickly and then shutting off, thereby never reaching its peak of efficiency.

One final note: Beware of buying a furnace based on the manufacturer's classification. One well-known maker advertises its furnace as "high-efficiency", despite the fact that its rating of 78%-efficient and its design indicate that this furnace is in fact a conventional unit.

The data included on this website is deemed to be reliable, but is not guaranteed to be accurate by the Toronto Real Estate Board. The trademarks REALTOR®, REALTORS® and the REALTOR® logo are controlled by The Canadian Real Estate Association (CREA) and identify real estate professionals who are members of CREA. Used under license.