After years of working we are having a saving to buy a house. However, lawsuits are taking more and more often and hard to be solved.
I heard that Vland is opening a section called Controlling Risks in Real Estate Transactions to support buyers. Could you please advise me the safe process of buying a suitable house?
Mr. Phan Cong Chanh, Personal Real Estate expert, Board of Director of Phuc Vinh Investing Consultant Co., Ltd says the process of finding a good house includes:
It’s important to control risks before buying a house
Step 1: Determine the place
The place you’re going to live depend on how convenient it is. Convenience is the top concern for people who want to buy a residential house. Elements should include: Near the hospital, the work place, the school and the market.
There are 4 questions that need to be asked to determine where you want to live:
– Is it near the hospital?
– Is it near the work place?
– Is it near the kids’ schools?
– Is it near the market or the supermarket?
Remember to never buy a house just because it looks beautiful on the leaflets. You need to buy the house that is the most convenient for you and your family to live.
Vietnam will complete the Metro systems in coming time. Being close to a Metro should be one of the concerns.
Step 2: Determine the budget
How much do you want to spend? Do you need to join anyone? Do you need to get a mortgage? How much do you need to borrow?
According to my experience, a safe loan should not account for more than 50% of the house value and the money you have to pay the bank should not take 50% of your income. Following this rule will help you in determining the amount you have to pay every month and the due date of the loan.
For example, if you need to buy an apartment which is worth 650 million, the mortgage should be less than 375 million. If your family’s monthly income is 20 million then you should spend up to 10 million to pay for the house. In case you choose to borrow from the bank and pay both the interest and the principle every month, it’s advised that you should find a bank which offers a home loan package.
Imagine you get a loan of 10 years; annual interest rate is 15%. This means that you will have to pay 7.812.500 VND at the most. If the lending period is longer, it will be much better. However, most banks adjust the interest rate of the loans according to a 6 or 12 months period, and interests should decrease through time.
Be careful with banks offering loans with very low interest (6-8%). Normally they will apply this kind of rate for the first year and floating rate for the following years.
Step 3: Define the property
The important question that needs to be answered at this step is: house or apartment?
Houses have an advantage of freedom, while apartments have better security. If your family has many children or old people who usually have to stay home alone, apartments will be a better choice. In case you are single or newly married, you should choose a house.
After that, make a list of properties in the area you are caring about. You can find houses from all possible sources and should visit them as much as you can. You should make a list to check and compare the neighborhood and the conveniences. You can also find a realtor to save time. Remember, you don’t have to pay money to brokers when buying houses in Vietnam
Step 4: Identify the legality
This is an important step; therefore you should ask a lawyer or consultant for help.
You should buy a house with a certificate of house ownership or an apartment with a legal contract. Prestigious investors and connected landing banks should be on the list, too. Loans given are only for homes of 30 m2 or above and depend on the investors, the contract value and the buyers’ certified income of the apartment.
From who to buy is more important than what to buy. Only prestigious and good sellers are worth making deals.
Step 5: Implement the transaction:
Have the documents inspected by the bank before you deposit. You should only sign the contract after the bank agrees to give you the loan. Some condominium projects are connected with banks so the procedure of getting a loan can be easier. However, you need to note that different banks have different policies.
It’s a common mistake that the documents are inspected after the contracts are signed. This is very risky as once you cannot get the mortgage, you may lose the deposit.
Excelling these 5 steps can help people to minimize the risk when buying a house, especially for those who lack experiences.