Even if you’re current in your mortgage payments, you could still face foreclosure if you don’t keep up with the assessments. You could also be sued by the resort for the entire unpaid sum, plus accrued interest, late charges and legal fees.
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When and how to refinance your timeshare
Is your timeshare becoming a financial burden? Here's how to refinance.
You had visions of jetting off to the snow or sea for vacation every year. But now, you realize you’ve committed to a developer-financed timeshare with a high interest rate and payments that make you wince.
The good news: It may be possible to swap out your current financing to a different loan with a lower rate. You can turn to a specialized lender, take out a home equity line of credit (HELOC) or use a personal loan to replace it.
Consider your specific situation before refinancing your timeshare
You may want to consider refinancing your timeshare loan or paying it off with another type of loan if you’re experiencing any of these scenarios:
- Your interest rate is too high.
With developer financing, timeshare interest rates can be as high as 20% — ouch. Instead, you can try to refinance with a specialized timeshare loan with a lower rate or different loan type, such as a HELOC. - You want to free up your monthly cash flow.
By refinancing or switching to a lower rate loan, you can significantly reduce your monthly payments. - You’re facing foreclosure on your timeshare.
If you’re at risk of foreclosure because payments are too high, refinancing could help you obtain more affordable payments. But if that won’t work, you could try other options, such as selling it back to the resort.
On the other hand, refinancing may not make sense in these situations:
- Your timeshare is proving to be a cheaper way to vacation.
- You don’t have good credit and may not be able to secure a better rate.
- You want to get rid of the timeshare altogether, even if it costs money to do so.
5 timeshare refinancing options
Since there’s no equity in timeshares, the refinancing process is a little different. These are the paths you can take to refinance your timeshare. Keep in mind that some of these options can be risky and could lead you into even more debt if you’re not careful.
1. Specialized lenders
Most banks won’t refinance a timeshare mortgage because the resale value is low. However, some lenders specialize in timeshare refinancing and can offer you a lower payment.
For example, LightStream — a branch of SunTrust bank — offers timeshare refinance loans to US citizens with good credit. While interest rates vary, there are no original fees or prepayment penalties and you can apply online.
Compare online lenders for timeshares — they usually offer more competitive rates since they don’t operate physical branches.
2. Home Equity Line of Credit (HELOC)
If you’ve built up enough equity in your primary home, you may qualify for a home equity line of credit at a significantly lower interest rate compared to your current loan. Once approved, you can use the HELOC to pay off your higher-rate, developer-financed loan.
3. Personal loan
If you have a solid credit score, you may qualify for a non-collateral, personal loan that can be used to pay off your developer-financed loan at a lower rate — usually around 8% to 12%. While rates are typically higher than HELOCs, they’re likely lower than the rates offered by timeshare agents.
4. Credit cards
If you have a high credit card limit with low or no interest for a time, you might be able to use it to pay off your timeshare with a credit card. But be aware this can be risky. When the low intro interest rate expires, you’ll be hit with higher interest rates. And one late or missed payment could lead to an interest rate hike overnight.
5. Borrowing from a 401(k)
Another option is to borrow against your 401(k) retirement savings. The interest rates for 401(k) loans aren’t based on your credit history, and you can repay the loan over a number of years. But you could jeopardize your future retirement or face penalties if you don’t pay the loan back within five years.
Compare personal loans
If you want out of your timeshare, you do have options. Research pays off in savings, so be sure to shop different lenders. Get started comparing your personal loan options to find the best deal for your situation.
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Popular timeshares you can refinance
Many major resort brands have exit programs or the ‘right to first refusal,’ which means they have first dibs on selling or buying back the timeshare. If you want to refinance, your first step is to speak to the resort directly.
Some of the most popular timeshare brands in the US are:
- Bluegreen Resorts
- Capital Resorts Group
- Club Casa Dorada
- Club Intrawest
- Diamond Resorts International
- Disney Vacation Club
- Four Seasons
- Grand Pacific Resorts
- Hilton Grand Vacations Club
- Holiday Inn Club Vacations
- Hyatt Residence Club
- InnSeason Resorts
- Interval International
- Marriott Vacation Club
- RCI
- Ritz-Carlton Club
- Sapphire Resorts
- Shell Vacations Club
- Sheraton Flex
- Silverleaf Resorts
- Starwood Vacation Ownership
- Westgate Resorts
- WorldMark by Wyndham
- Wyndham Resorts
Options for getting out of your timeshare contract
Timeshares are legally binding purchases. If you don’t want your timeshare anymore but refinancing isn’t working out, your options are:
Rescind your purchase
Timeshare regret? If you just bought your timeshare, you might be able to cancel the purchase — but you’ll need to move quickly. The rescission period varies between states but is usually between three to 15 days.
You have a right to cancel, so your seller can’t ask or require you to give up the right by signing a waiver. To rescind and get a refund, write a letter to the homeowners association.
Sell it back to the resort
If you want to get rid of your timeshare, your first step is to speak to the resort directly. Many major resort brands have exit programs or the ‘right to first refusal,’ which means they have first dibs on selling or buying back the timeshare. They may already have potential buyers or be interested in buying back the timeshare.
Resell your timeshare
If the resort won’t buy back your timeshare, be prepared for offers that are a fraction of the original purchase price. The secondary market for timeshares is huge and oversaturated, so you may need to be patient or cover closing costs and maintenance fees to push through a sale.
You could negotiate with the original owner, too. For example, they might release you from the timeshare if you agree to cough up a few years’ worth of maintenance fees.
Collect points for future travel
At some top resorts, developers offer you the chance to trade your timeshare for rewards points. This is an incentive to stay inside the resort system. If you transfer ownership to someone outside the brand, you won’t be privy to those rewards.
Consider a timeshare exchange
If you’ve paid off your debt, you might be able to trade in your timeshare for another one in a different location. The Association of Vacation Owners has a list of preferred exchange companies on its website. Keep in mind that off-peak season timeshares and timeshares in less popular destinations may be difficult to exchange.
Engage a timeshare exit company
Think of this as a last resort. If you can’t sell your timeshare and the resort won’t take it back, you could hire specialized lawyers to do the legwork for you. These companies are controversial, and their services are expensive.
It could cost you up to $5,000 to exit the timeshare. If you have years of maintenance fees and monthly payments ahead of you, the financial hit may be worth it.
Bottom line
Timeshares are tricky, and unlike most real estate purchases, they don’t build up equity. If your rates are sky-high, you could refinance down to a better rate with a specialized lender, home equity line of credit, personal loan or credit card.
Frequently asked questions
What’s the difference between a deeded and nondeeded timeshare?
With a deed timeshare, you’re purchasing a portion of the property. As an owner, you may also have a say on the operation and maintenance of the resort.
With a nondeed timeshare, you’re buying the right to use the property for a set period of time, usually 10 to 50 years.
Will foreclosure affect my credit score?
It depends if the developer reports it to the credit bureaus. If they do, the timeshare foreclosure will show up on your credit history and may harm your score. Typically, a foreclosure of any kind will cause your credit score to drop by 100 points or more.
How much does a timeshare cost?
According to the American Resort Development Association, the average sales price for a timeshare in 2018 was $22,180. This doesn’t include the annual maintenance fees, which can increase over time. As a timeshare owner, you’re responsible for paying the fee every year, regardless of whether you stay at the timeshare or not.
Can my family inherit my timeshare?
Yes, if you have a lifetime contract and keep up with your payments.
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