Should You Refinance a Timeshare to Exit Ownership?

Refinance timeshares: agent holding a miniature house while pointing to a document

For those who want to refinance timeshares, consider why you want to explore this option. Most likely it’s because you can no longer afford monthly payments on your timeshare loan in addition to expensive maintenance fees. If this is the case, is refinancing your timeshare loan really the best-case scenario? Or instead of exploring financing options on your loan, should you just exit vacation ownership altogether?


If you are weighing your financial options and are not sure how to proceed, read this guide on timeshare refinancing. Here we’ll explain how timeshare payments work and how to get a loan in order to refinance timeshares. From this, we hope you’re able to decide whether you want to seek a timeshare refinance or if exiting your timeshare is a better option.


How Timeshare Loans Work

Similar to real estate, buying fractional vacation homes at their full purchase price is unrealistic. Most people who are in the market to buy a timeshare don’t have surplus amounts to drop on a home they’ll only spend a week of their year in. Many people who buy timeshares didn’t even plan on making their purchase until they were convinced to do so by a timeshares sales agent. Buyers often opt to provide an initial down payment and finance the rest of their timeshare purchase with a loan or payment plan.


When exploring financing options with potential buyers during the initial sales pitch, timeshare developers will usually try to sell customers on developer financing. This means paying off the cost of the timeshare to your developer over time. It’s not technically a loan because you aren’t borrowing any money from your developer. You’re just agreeing to pay off your property in smaller segments rather than cover the entire cost all at once. 


What’s the problem with this timeshare financing option? Similar to loans on your primary home, these payments come with interest. And if you don’t have a good credit score, your payment plan will probably have very high interest rates. If you’re stuck with extremely high interest rates, there are other options for financing your timeshare payments that may prove to be cheaper.


How to Refinance Timeshares

Refinance timeshares: person using a calculator and holding a receipt

Say you have a payment plan with your developer and are finding that the interest rates are getting too high for you. If this is the case, you may be thinking it’s time to refinance. But how exactly do you refinance timeshares? Here are some steps you may be able to take and the pros and cons of each option.


Switching From Developer Financing to Personal Loans

Instead of having a payment plan with your developer, you can seek out a third-party lender to finance your timeshare. With any type of loan, you will always have lower interest rates if you have excellent credit. But the difference between interest rates when borrowing from your developer versus getting a personal loan are pretty dramatic. Timeshare owners with good credit will almost always get a lower rate with a personal loan than with their developer. 


Since interest rates tend to be lower with personal loans than with developer financing, those who are unable to keep up with payments to their timeshare company may consider taking out a private loan to pay it off. The pros of this option is that your monthly payments will be lower. And if your credit score has improved since your initial purchase of the property, you almost certainly will get lower interest rates with a personal loan. 


What’s the downside? Refinancing to get a lower monthly payment means that your loan terms will likely extend by a few years. So instead of having a plan that will get your property paid off in seven years, you may have to extend to 10 years. So while in the short run you may feel like you’re saving money, your total loan amount might actually cost you more in the end. 


Another con of transferring to a personal loan is that if you have bad credit, your interest rates might actually be higher than with your developer. If this is the case, you may want to refinance timeshares with a home equity loan. 


Taking Out a Home Equity Loan

Refinancing and Money Equity Loan written on a notebook

If interest on a personal loan is unreasonably high, taking out a home equity loan is also an option for timeshare refinances. Home equity loans are a type of funding where borrowers take a portion of their primary home value to fund another purchase. These loans are called secured loans because they are “secured” by the value of your house. Homeowners may take out secured loans to buy boats, pay for college, or purchase second homes and timeshares. 


The pros of this option are that getting a home equity loan is easier than a personal loan. So if you have paid off a significant amount on your mortgage, this may be an accessible option for you. Additionally, you’re probably going to get a lower interest rate on a home equity loan than on a personal loan. 


The downside of taking out a home equity loan to refinance timeshares is that it’s very risky. If you are unable to pay for your timeshare loan, your primary home serves as your collateral. If you’re already having trouble keeping up with timeshare payments and maintenance fees, this option is probably not worth it. Why risk losing your home on a property that you probably only visit once a year? 


Thinking of Refinancing? A Timeshare Exit May Be a Better Option

Switching over to a personal or home equity loan to help pay off your timeshare may seem like a good idea in the short term. After all, having lower monthly payments would definitely help you out financially. And if you’ve paid off your timeshare property to your developer, it may make it easier to exit your timeshare — or will it?


Do you really want to take out a personal loan or use your home as collateral just to pay off a property you don’t even want anymore? Even if you’ve paid off your timeshare, you’re still going to be handing over thousands in maintenance fees to your developer. 


If you want to refinance your timeshare so that your provider will allow you to exit your ownership once the property is paid off, you’re just going to be left with more loans that’ll take years to be released from. And who’s to say that you’ll even be able to exit your contract once your property is paid off? Most timeshare companies are built to make exiting ownership nearly impossible.  


Are monthly loan payments on your timeshare mortgage overwhelming you? Or are you only wanting to refinance timeshares because you want to end your contract? If either of these situations apply to you, there’s a better and cheaper option out there. And it’s with Centerstone Group


We are a full-service advocacy group that helps timeshare owners seek release from their timeshare contracts. We also provide transfer services for owners that have paid off their timeshare mortgage. Our team of timeshare exit experts are skilled at resolving timeshare issues in the shortest amount of time and at the most affordable rates in the business. So before you decide to refinance a timeshare, contact Centerstone Group to see if you’re eligible for our services.


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