Is Financing Available for Fractionals?
Yes, financing is available and is more akin to financing a second home – though more than half of all fractional buyers pay cash. Rates are comparable or slightly higher than a traditional mortgage. Fractional deeded ownership can be executed by a tenancy-in-common (“TIC”) that provides for co-ownership and is evidenced by an undivided interest in the property. The TIC structure facilitates fractional loans, which enables each co-owner to have their own mortgage facility, substantially decreasing the risk of co-ownership. In the event of default by a co-owner, the lender can only foreclose on that individual borrower’s undivided interest. The undivided interest of the other owners remains secure and protected.
