Equity loan on DVC

[UConnJack]

I was wondering if anyone out there has tried to take an equity loan out against their DVC? We own it outright, but are looking to do some debt consolidation and are considering doing this if possible. Does Disney have any restrictions on this? My bank will do equity loans on 2nd homes, so I assume that includes timeshare deeds, but even though DVC has increased in value, has anyone experienced complications since DVC is a limited time program? Does anyone have any experience on how DVC is appraised?

Thanks!

 

[ddoc185blt]

 

[HM]

It would have never occured to me that this was even possible.
Did you ask your bank if they do equity loans on timeshares?

 

[marynvince]

not in a million years

 

[UConnJack]

not in a million years

That it can be done, or that you would personally do it?

 

[BirdsOfPreyDave]

I'm neither a banker nor a real estate lawyer. Take this with a grain of salt, it's just my humble opinion...

I don't know that you're making a safe assumption. Your bank will probably not treat a timeshare interest in the same manner they would a second home you own outright. If you do find a bank that allows you to use a timeshare interest as collateral, you're probably going to be offered an interest rate that will drive you right back to a tradional home equity loan on your primary residence.

I'm also not sure how DVD would come into play with such a transaction. They have ROFR if you're outright selling the contract, so I would guess they'd also have a say in anyone taking out a lien.

If you're serious about pursuing this, I'd give Member Administration a call to see what they say. It may be a non-starter because of the terms of your contract with Disney, even if you do find a bank that will do such a loan at a reasonable interest rate.

 

[daisygirl902]

I'm from Canada so perhaps the rules are different here, but I just talked to my financial advisor as I want to pay out the DVC contract i just bought as the Canadian Dollar is particularly strong right now.

She told me you can't get a secured loan on any timeshare or vacation club program....my best option was to increase my line of credit (which is a good 6% lower interest rate than Disney charges) and pay it off with that. I also loved that option as it allows me to pay the bare minimum while my fiance finishes school, and then pay it off very quickly once he is done!

 

[whitfamily]

I want to pay out the DVC contract i just bought as the Canadian Dollar is particularly strong right now.

No offense, but that comment makes me sad inside! I remember when I could go to Canada and it would be fifty cents U.S. for a Canadian Dollar. the good ole days of cheap Molson Canadian!

 

[DoctorK]

She told me you can't get a secured loan on any timeshare or vacation club program...

This is incorrect (at least, here in the states). I was looking at financing a resale contract with timesharelending.net, and they actually hold a secured mortgage on the contract. They were willing to lend up to $62/point for our AKL resale. It's a small contract, though, so the closing costs made it a little cost-prohibitive. The interest rate was 12.9% which was also a little high for us, but if you're looking at consolidating debt, that might be a better rate.

Not sure if they'll do equity cash outs, though.

Good Luck!

 

[toniosmom]

You can use an existing HELOC to purchase DVC -- it's as simple as writing a check if you have one on your current home right now. If not, it's a pretty painless process to get it. The interest rates on HELOCs right now are much lower than Disney financing.

Having said that, I wouldn't do this if the equity in my home was pretty low. Home values are so volatile right now -- I'm sure we are ALL praying the values don't go down any further than they already have. I would only do it if I had a good 50% equity in my home. If you lose your job tomorrow, you don't want the fact that you added $$$ to your HELOC to purchase DVC that the difference in payment breaks you.

Not sure if you can secure it against the timeshare itself.

If you are not a current owner, see if you can break your initial purchase down into smaller contracts, i.e. break down a 160 minimum purchase into two contracts -- 100 and 60. In case you need to sell, smaller contracts are much easier to sell. I wish I knew that when I first purchased.

 

[stefanospops]

The way I see it, DVC is still an asset that can be sold, but it is more like a car than a house. It depreciates over time since there is an end date to ownership. But you should be able to borrow on it.

My suggestion though, is that if you have debt, consider selling some of your DVC to pay off debt rather than borrow against your DVC. If you only have one larger contract then maybe sell it and purchase a smaller contract, then buy another contract later on. That is just my suggestion.