We detailed the Deferred Payment Plan of Exclusive Resorts earlier this month. According to Michael Beindorff, the destination club’s COO, the plan was developed to make the membership more accessible, since it allows the prospect to write a much smaller check, and finance the rest. It also shifts some of the risk to the lender, since if the club falters before the loan is fully repaid, the member has less capital at risk.

Now, there are financing options available to other fractional real estate buyers, such as prospective private residence club owners. Although most fractional purchases have typically been done with cash (about 75%, according to Bob Waun, Founder & CEO of Vacation Finance), financing options are available from either the developer and now a growing number of boutique fractional lending groups.

Financing costs are reasonable. According to Scott Christian, president of First Fractional Funding, a typical adjustable rate mortgage (ARM) for a private residence club purchase will be around 7.5% for five years – compared to a 7-year home equity loan at about 6.8%.

Download our Guide to Fractional Financing (PDF)

If you don’t already have a copy, get our free Decision Guide to Fractional Financing. It compares all the options that we know of, from the boutique lenders like Independent Resort Lending to specialized mortgage brokers like NextStar Funding.

And of course, if you are considering buying at one of the leading branded fractional developments, such as the Ritz Carlton Club, ask about the financing options that they will have put in place.