Timeshare debt is a common problem, affecting millions of people. Many of those who find that their timeshare isn’t what they expected, or that they simply don’t want to own the property anymore, end up with a timeshare mortgage and a series of annual fees they can no longer afford to pay. In the worst-case scenario, this can lead to credit card debt, levy action against bank accounts or even foreclosure and judgments against your home.
Fortunately, there are ways to get out of timeshare debt and avoid these consequences. The most common options for those in this position include getting a personal loan or using a home equity line of credit (HELOC). These alternatives can help you avoid the timeshare fees and debt, giving you a clean slate to start over.
The benefits of refinancing your timeshare loan with a personal or home equity loan include convenience, affordability and speed. Working with a lender that is familiar with the process of financing timeshares can make things much easier, especially for those who are unfamiliar with the lending landscape and have limited experience shopping around for loans. Furthermore, these lenders are usually willing to work with those who have a bad credit score, meaning that people with less-than-perfect credit can still be approved for financing, even if they’ve been turned down by other lenders.
However, it’s important to remember that personal loans are unsecured, meaning that your home or other assets are at risk in the event of default. Also, you may have trouble finding a lender who will provide a large enough loan amount to cover your timeshare mortgage or the associated fees.
In addition, if you’re able to qualify for a personal loan with a lower interest rate than your timeshare company is charging you, this will save money in the long run. As with credit cards, it’s crucial to keep track of your repayment schedule so you can pay off the balance before the 0% introductory period expires.
For those who have a solid credit score and a high income, it’s possible to get a mortgage or HELOC to pay off your timeshare. These loans are secured by the value of your home, which provides a higher loan limit and better terms.
It’s important to note that a home equity loan is typically considered a second mortgage, meaning your property will be at risk in the event of a default. Furthermore, these loans will have a higher interest rate than the one you’re paying your timeshare company.
While paying off a timeshare loan with a mortgage or home equity loan may seem like the best option, it can actually make things worse in the long term. In the worst-case scenario, if you default on these payments, you’ll be reporting them to your credit report. This will affect your ability to obtain new credit in the future, and it could cause your credit score to plummet. Additionally, a default on a timeshare loan can lead to levies against your bank accounts, and could result in your timeshare company reclaiming the property.