Because you are not buying an actual second home when you purchase a membership in a destination club, conventional mortgage lenders aren’t likely to help you in financing your membership deposit.

Some destination clubs will assist in acquiring financing, though the rates are likely to be higher than you would like. For this reason, most buyers of destination club memberships turn to home equity loans or second mortgages to finance their memberships, if they don’t have the deposit available. In this way, you will receive an attractive interest rate on a new membership and possibly even achieve tax savings as the borrowed funds are based on your original home (check with your accountant to understand the financial ramifications of purchasing a destination club membership, including finance and tax options). Exclusive Resorts began offering a finance option in 2007, and it’s likely that others will follow suit.

An important point to remember is that destination club memberships, while they may be largely or wholly refundable, are not necessarily liquid. Most clubs have a clause in their membership agreements that stipulates memberships will only be refunded when new membership deposits are received - this prevents a ‘run on the bank’ situation, but it could mean a significant delay before receiving your refundable portion of your membership deposit. Ask before joining to prevent surprises.

OTHER ARTICLES THAT MAY BE OF INTEREST

• Destination club price increases
• Exclusive Resorts associate membership unveiled
• Leaving a destination club
• Try before you buy
• Private Escapes membership deal