Can I Sell My Timeshare if I Have a Mortgage?
One of the big questions we consistently get from timeshare sellers is “can I sell my timeshare if I have a mortgage?” The good news is that yes, owners can sell their timeshare if they have a mortgage loan attached to it, but it can be complicated.
Because of the way timeshares are sold at resorts, most timeshare owners take out a loan to buy timeshare when they initially sign up for the purchase.
The resorts make it sound so simple and cost-effective, mainly because many have their own finance departments to streamline the process, like the way you’d buy a car.
What’s the Difference?
The big difference is that timeshares are not secured property in the same way a car or a house would be considered property in the minds of the lenders. So, using the term mortgage is not really an accurate way to describe the loan, since most of these are considered unsecured loans – more comparable to a credit card line of credit.
A timeshare loan is still considered a contractual obligation between the lender and the timeshare owner. In many instances, even though the original loan was done through the resort, the resort would have “sold” the loan to a third-party lender so an owner would be obligated to the lender, and not necessarily to the resort, to pay back the loan.
Because this is a financial obligation, not paying back the loan can lead to the lender seeking debt collection and eventually taking the case to the courts for resolution.
What do Sellers Have to Do?
Similar to the way a home purchase is concluded, the loan needs to be paid before a sale can be completed.
Proceeds from a sale can go toward paying off a loan and the seller would keep any balance from the sale. Once the finances are completed, the sale can be closed and timeshare transferred into the name of the buyer.
Keep in mind that timeshare companies cannot cancel or forgive such a loan. Exit companies certainly cannot cancel a timeshare mortgage. Only the lender can adjust the specifics of a loan or relieve the seller of any possible obligations. The agreement is exclusively between the lender and the seller.
Again, comparable to a home sale, a timeshare can be put up for sale and sold even if it has a loan attached. The loan should be disclosed to the buyer and would be handled during the closing process by the closing company.
Depending on the outstanding balance of the loan, payment could be negotiated between the seller and the buyer as part of the negotiation process. However, sellers should be prepared to pay off the remaining amount of the loan if the proceeds from the sale do not cover the loan amount.
One way to cover the amount is to set a sale price which exceeds the loan amount, but keep in mind that market forces tend to set resale prices.