How to Refinance a Timeshare

by William Dailey
Timeshares can be a great asset.

Refinancing a timeshare can be difficult because both private and commercial banks consider it a high risk liability rather than an asset. Owning a timeshare not only involves the mortgage payment but it also includes annual maintenance and assessment fees. As a result, lenders usually consider it a bad investment and do not readily refinance due to the risk of the owner being unable to make the payments. Nevertheless, there are other refinancing avenues that you can use particularly if you have a good credit report.

Consult Timeshare Re-Financiers

There are companies that specialize in refinancing timeshares to offer clients slightly lower payments than they are already paying. Conduct research on the companies that are available in your location, then consult them about your proposed refinance and get a non-binding quote. However, keep in mind that because they are offering a specialized service, their interest rates are usually higher than you would get at a bank.

Home Equity Loan

A timeshare is less reliable as collateral than a home because its resale value is lower. If you cannot find a lender willing to refinance your timeshare for this reason, you can use your primary home as security for the refinance mortgage and get a home equity loan. The lender then extends a cash lump sum to you to pay off the timeshare and you are left paying the significantly lower home equity loan payments.

Credit Card Refinance

If you do not have a home, you can still refinance your timeshare using a credit card with lower monthly and interest payments. Timeshares ordinarily involve high payments, especially when you obtain in-house financing. However, credit cards are usually at least 5 to 10 percent points lower and offer a cheaper, more easily accessible way to refinance.

Leveraging Yourself

You could also refinance your timeshare using a personal unsecured loan or borrowing against your 401(k) retirement savings. Both options offer low interest funds payable over a number of years. Consult a financial adviser and weigh the risks of jeopardizing your future savings and credit score against those of not re-financing the timeshare. Proceed only if the benefits of re-financing the timeshare are greater than the risk to your long-term financial standing.

About the Author

William Dailey is well-versed on local and international affairs with sound financial, economic and business knowledge. He is an MBA and Business Administration graduate from the Kingston University and The London School of Business and Finance, respectively. William has been writing professionally since 2011.

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