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Timeshare financing may make ownership dream come true
You have a lot of options when it comes to your vacation. If you’re considering a timeshare purchase, it pays to do some homework. Here are some things to thing about, and some questions to ask.
- Timeshares—or fractionals—are an enticing option for consumers who want to maintain partial ownership of a vacation home without absorbing the entire cost of ownership.
- In some cases, fractional ownership allows buyers to purchase a higher-end property than they would otherwise be able to afford on their own.
- With fractional ownership, the purchase price can be based upon the amount of time the buyer plans to use it.
- Depending on the type of timeshare ownership, it can also mean no maintenance fees or hassles, because homes are maintained and managed by the property developers.
How can I keep from losing money when buying a fractional?
- When considering a fractional, it’s important to remember that you are making a real estate purchase, so there are no real guarantees. Property values fluctuate all the time, and consumers have no control over this.
- However, with consumer confidence and the real estate market on the rise, many people believe it is a great time to invest in a fractional.
What financing options are available to purchase a timeshare?
Many people think financing options for a fractional are limited, but that is not always the case. Options include:
- Cash. Cash is typically the most common method to purchase a vacation property. This is in part because there have not always been many financing options, especially during the recession. This has changed recently, and now borrowing may be a smarter option depending on the interest rate and how this same money might be otherwise invested.
- Unsecured consumer loans. For new properties, resales or even refinancing of an existing fractional it can sometimes be difficult to find a bank that offers timeshare financing. However, a little online research may identify loan opportunities that may not be available from traditional brick and mortar lenders. Check online for lenders that offer unsecured loans that approve borrowers based on their personal financial history, among other factors. Or, consult organizations such as the National Timeshare Owners Association for their recommendations. (Editor Note: NTOA receives compensation for referrals to LightStream.)
- HELOC. If you have equity in your home, HELOCs are an attractive option. These types of loans can often be tax deductible1 and have variable interest rates.
- Developer financing. Many properties offer financing options that may help a buyer close a deal. They often work with local banks to provide loans that may otherwise be difficult to find. Do your research to see what options are available. If you decide use developer financing, make sure to check online lenders that offer timeshare financing to see if you can obtain a loan at a better rate.
1See a tax consultant in your area who is qualified to give professional advice.