The timeshare market, while different from a real estate purchase, often follows similar protocol, but unlike a traditional property purchase, it is not an investment as there is rarely any resale value. The timeshare option is excellent for individuals who are looking to vacation in the same place every year.
The monthly cost of owning a timeshare will depend on a variety of factors, however in general it is more expensive than originally anticipated. It will be important to be mindful of ‘hidden fees’, in addition to any mortgage you may have on the property.
Typically it is the maintenance https://rcivip.com/timeshare-maintenance-fees/ and HOA fees that ultimately become an issue for timeshare owners. Having an understanding of the monthly costs of a one or two week vacation will help you, the owner, to prepare accordingly.
This article will cover the primary factors that contribute to timeshare monthly costs:
- The resort where your timeshare is located and its exclusivity
- Memberships, maintenance fees, and other resort related payments
- Upfront payment and whether you have a mortgage on your timeshare
The Exclusivity Of The Resort and Its Location
Not all timeshares are created equal, and depending on how high-end the facility is where your timeshare is located will determine the monthly cost to you the owner.
Most timeshares are tiered, meaning that if you own a timeshare at a more exclusive resort in a highly desirable location such as the Maldives for your beach paradise vacation or Vail, Colorado for your ski trip, you are clearly going to pay higher membership and maintenance fees.
Regardless of the grade of your timeshare, they all come with a cost. You can expect to pay annually anywhere from $600 USD to $20,000 USD in membership fees depending on how ritzy your resort is. (1)
According to US News publication, here is what you can expect to pay in fees for a mid-range timeshare:
“Factor in other fees: The average annual maintenance fee is $980, according to ARDA. And depending on where your timeshare is located, and if it’s part of a timeshare resort, you may have a transfer fee, a recording fee and, if there are major repairs required, you could be given an assessment fee, which could tally up to thousands of dollars. You also may pay property tax In short, read the contract carefully and understand what you’re getting into before you commit to buying a timeshare.” (1)
Above all else READ THE CONTRACThttps://rcivip.com/look-timeshare-contracts/. With such variability on fees for a one week a year vacation in order to avoid a very stressful situation read the entire contract to be sure you understand exactly what costs you will be responsible for.
US News publication, goes on to further elaborate on the need to read your contract:
“ The resorts are often very nice, but the contracts may not be so favorable,” says Gordon Newton, the author of “The Consumer’s Guide to Timeshare Exit,” who runs Newton Group Transfers, a Grand Rapids, Michigan-based company that specializes in helping people get out of their timeshare contracts. (1)
Naturally, if you buy into a high-end timeshare resort in a sought after location your fees will be higher, still all timeshare owners are in the same boat, and must read thoroughly the contract in order to protect themselves financially.
Membership, Maintenance, Repair Costs, and Interest On Missed Payments
Before purchasing your timeshare find out how much maintenance fees will be annually, and if you can break this down into monthly payments. Most institutions provide a monthly payment plan that is reasonable; however, these same resorts will also tack on incredibly high interest rates for each missed payment.
A late fee of 10% may not seem like a big deal, but often these interest rates, particularly internationally owned timeshares, are compound. If for whatever reason, you may just forget to pay, four months of missed payments of $400, plus compound interest can be a heavy load for your bank balance.
Find out exactly what your resort’s policy is on late fees, do they charge interest? Do they charge interest on top of the interest? These questions are crucial to ask.
At first glance, a $300 USD monthly payment may not seem too harsh, but remember it is for a one or two week vacation every year. If maintenance fees are late you may quickly find your account delinquent and unable to get out of your timeshare!
Ask questions, then ask more questions, and if you have any doubt consult with a legal professional who can read and thoroughly explain the contract to you.
Initial Purchase: Upfront Payment Versus Mortgage
The average cost of a timeshare is $20,000 USD, depending on whether you choose a specific week to vacation, a floating timeline, or a points based system. This may or may not be a valuable investment for our vacation time.
Keep in mind that timeshares rarely have any resale value. Although you may ascertain a mortgage for your timeshare as you would any other real estate property, it is not a financial investment, even if perhaps it is a positive vacation time investment.
Some folks will be able to pay the initial cost upfront, which is excellent, however if $20,000 is not pocket change for you then you may require a mortgage. Borrowing money for a timeshare is tricky business as there is rarely a resale value on the property, but often all of the same responsibilities to property ownership.
If you do have a mortgage this will clearly increase the monthly cost of owning a timeshare. Whatever maintenance, membership, and other costs associated will be added to your mortgage.
As most banking institutions do not lend money for timeshares you will likely be paying one monthly bill directly to the resort where your timeshare is located.
Is having a mortgage plus monthly bill payments worth it for a one or two week vacation? Only you can decide this for yourself.
Read The Fine Print and Seek Legal Assistance To Find Out Exactly How Much You Will Be Paying each Month On Your Timeshare
With several factors contributing to the overall monthly cost of owning a timeshare, be sure to read all of the details in your contract. Be aware of the following potential fees that can add up to your monthly cost:
- Membership fees
- Maintenance fees (does this include electrical, water, and other related bills?)
- Repairs to the inside of the dwelling (some resorts will cover the cost of upkeep to outside the grounds, but not inside the until)
- Property tax
- Interest on late fees (is it compound?)
- Legal fees in case you will need to transfer ownership
The number one rule to safeguard yourself financially from timeshare property ownership is to always read the fine print of your contract carefully so that you are not caught off guard. Additionally, choose a reputable company that you feel you can trust to behave ethically to keep your monthly costs within a reasonable range.