Time share foreclosures
When people first buy a timeshare home, it can seem like a dream come true. But if your financial circumstances change, the loan repayments on a holiday home can become a serious drain on your resources. Thousands of time share homes are lost through foreclosure every year - partly because borrowers prioritize loan payments on their primary homes.
In fact, timeshares are a notoriously bad investment. The deposit and monthly payments can seem modest at the outset, but timeshare properties are very difficult to dispose of once you've signed on the dotted line. You should steer clear of timeshares if there is even a small chance that you will have difficulty with payments.
If you do take on a timeshare and find yourself in financial trouble, it may be difficult to find a buyer before the lender who finances the property starts foreclosure proceedings. Although the debt may be tiny compared to a conventional home loan, foreclosure on a timeshare can still have severe implications for your credit rating.
Most owners in this situation end up selling for a loss to escape from the financial strangle-hold and some people even give their timeshares away for nothing. One option is to donate the property to a charity to be raffled off as a fundraiser, but you will need to find a charity that is happy to take on your timeshare.
One reason that timeshares are so problematic is that so many people are involved in the transaction. The developer, the lender, the management company and all the people sharing ownership all have a financial stake in the property. If an owner defaults on their payments or one of the companies involved changes its fees or terms, it can have implications for everyone else.
Another problem with timeshares is high pressure selling and fraud. Remember that timeshares are designed to make money for developers, not for holiday-makers. Be very suspicious of 'holiday clubs' or 'travel clubs' offering deals that sound too good to be true. For legitimate timeshares, stick to an established specialist timeshare broker such as Fairfield (www.fairfieldgetaways.com).
Because of the risks involved, timeshare foreclosures are generally a poor investment. If people are giving away timeshares for free, why pay to take on a property that you may have trouble getting rid of a few years down the line?