Timeshares — or “vacation ownership” in the language of timeshare companies — are marketed to the public as a way to invest in your future vacation plans. Sure, the thinking goes, you may plunk down $20,000 now, but think about all the years of fun once you have bought a unit in your favorite vacation spot! Won’t that be grand?
Perhaps it would, but the people selling you this vacationing fantasy often fail to give you a complete picture of what a timeshare purchase actually looks like. Had you bought a home in the destination of your choice, you wouldn’t expect to just pay the purchase price. You’d have to pay property taxes and hazard insurance. You’d also have to pay all the other normal bills.
In this small aspect of “paying for ownership” then, a timeshare isn’t that different from owning your own vacation home. There is still a big distinction, though. With a timeshare, you are paying a middleman to take care of utilities, taxes, and maintenance of the property.
You also don’t have a say over the day-to-day decisions the middleman makes about how to spend your money on the property. Does your Cancel Timeshare really need a new swimming pool, or is that an unnecessary expense? It’s not your decision, unfortunately, but under most timeshare contracts, you are going to have to pay for it anyway.
This article will take a look at the bottom line: What is your real timeshare price when you consider all the nickels and dimes you have to pay in addition to the purchase?
First, we’ll discuss the price of your unit, along with costs for the mortgage that many people have to get. Next, we’ll look at ever-increasing annual maintenance fees. Finally, we’ll examine the dreaded special assessment: extra amounts that your resort will probably ask you to pay at some point for a variety of reasons.
Buying and Financing a Timeshare
Timeshare price: keys on top of a signed mortgage document
The first part of any timeshare price is the amount that you pay to acquire the unit. Most people that get timeshares do it because, they reason, the purchase price for a timeshare would be less than buying a vacation home outright. Usually, that is the case. But keep in mind that timeshare costs are still pretty expensive.
1. Closing Costs
According to the American Resort Development Association (ARDA), the average purchase price for a timeshare unit is $22,942. That is a hefty chunk of change, but it’s not all that would be included in the purchase price. Just like with the purchase of any other real estate, there will be closing costs.
Those costs will be there regardless of whether you are purchasing a fixed-week timeshare, floating-week timeshare, or a more modern arrangement where you purchase a number of points for a vacation club. They can include:
Title search and title insurance: You need these to insure that you are actually getting the legal title you paid for. (And if for some reason you don’t, title insurance will make things right.)
Recording costs: Once you have your timeshare interest, it has to be recorded with the local government where your timeshare is located. (For example, timeshare interests in Las Vegas would have to be recorded with the Clark County Recorder.)
Escrow company services: This usually includes preparation of the documents related to your timeshare purchase.
(Note: The failure to take some of these necessary steps makes any attempted timeshare resale through less traditional channels, like eBay, very risky. Deeded timeshare interests, like other property interests, should be handled in writing by a qualified attorney or escrow company, depending upon your state.)
Depending on the exact deal you make, you could end up paying for some or all of these services. They can add anywhere from a few hundred to a few thousand dollars onto that $22,942 purchase price.
2. Getting a Mortgage for Your Timeshare Purchase
Chances are, you don’t just have $20,000-$30,000 sitting in the bank for a timeshare purchase. If that is the case, you will need to get a loan to pay for your timeshare. When you go mortgage shopping, though, you may be in for a nasty shock because most banks don’t give loans for timeshare purchases for any amount of time.
So, where do you get a mortgage? From the timeshare company directly, of course. But be ready to pay for the privilege. While a homeowner’s 30-year mortgage rate in 2021 may be around 3-4%, that’s not how timeshares work. Get ready to pay around 14% for a 10-year timeshare mortgage, according to ARDA statistics. It’s also common to see rates around 16%.
Rates commonly go even higher, to 20% and beyond, depending on the product, your credit, and the desired period of time of the loan.
To illustrate, let’s say you want to purchase a $20,000 timeshare and put $2,000 cash down. You get a 10-year, 20% loan to pay back the remaining $18,000. Assuming you make the minimum payment every month, you will pay over $12,000 in interest over a number of years. That means your timeshare price just more than doubled, from $20,000 to $43,743.23!