Buying the first house is perhaps the biggest decision for young married couple. It’s also a decision that has to be financially prudent because one wrong step and you might be saddled with a huge debt and an illiquid asset.
Minh and his wife (Tan Phu District, Ho Chi Minh City) has involuntarily sold their home for an acquaintance when they are no longer affordable to repay monthly interest rate. 2 years ago, they borrowed 900 million to buy an apartment which cost 1.3 billion with preferential interest rates within the first year. But since the second year, with floating interest rate of 13-15%, they felt they could not handle the pressure of debt growing day by day. Therefore, they ceded the apartment after 2 years of relationship.
On the other hand, Minh realized that an 2-bedroom apartment for newly married couples is too wasteful. Meanwhile, they had to strain to repay both principal and interest which accounted for over 50% of family income. On reflection, he decided to cede the apartment and then spent 800 million buying another with an area of 48m2. Although the new one is just enough for the couple and their little daughter, principle and interest debt is only equivalent to monthly rental (5 million). “In return, we were all relieved from all pressure and can accumulate financial resources to take care our children. We can buy a better and more spacious house in the future.” said Minh.
Many young couples who want to buy a house in Saigon had the same thoughts as Minh. More favorable, Ngan- bookkeeper of an import and export company in Tan Binh district and her husband has bought an apartment with an area of 50 m2 in District 12 with monthly interest rate and principal debt of approximately 7 million.
Now Ngan feels very happy with her decision. She said: “If you get a loan to buy a small house and repay principal and interest that equivalent to monthly rental, after 5-10 years, you can own property and have chance to purchase a wider house.”
Ngo Dinh Khan – Vice President of Sales and Marketing from Him Lam Real Estate JSC said: “Young families need a house but have a budget of only 300-400 million, they absolutely should not buy a big house by borrowing big loan. The best solution is to buy a low-cost house with the interest and principal debt not exceed the monthly rent. “
Many first-time homebuyers in large cities often have the mentality of owning a valuable property and consider it as the face of themselves. They want a nice and spacious nest, although they have to borrow large sums of money and bear interest from bank. This thought is not really consistent with the fact that banks in Vietnam only offer home loans with floating interest rates.
So, for those who have an urgent need for housing should not borrow big loan that exceeds the accumulated casch to buy a house. To avoid disrupting the financial equilibrium, consider choosing a credit package with less pressure and monthly principal and interest equivalent to rental.
An expert with 10 years doing business in HCMC real estate market said, at every stage of life, people will have the suitable property type for every level of income. Therefore, do not let yourself and your family bear overload loan just to buy a big house. Mr. Ngo Dinh Khan also advised: “If your finance is not ready, do not overdo the home loan because floating interest can destabilize your life “.
Doan Chi Thanh- CEO of Hoang Anh Saigon Real Estate said, it is very convenient for mid-income homebuyers to select their suitable apartment because the market now has many apartment projects with price range below 1 billion / unit. However, when buying apartments, customers need to ascertain the objective and subjective conditions as followed:
Objective conditions (related to the project and investors): prestige and financial capability of investors, project legal conditions of apartments, the current project status, progress, payment methods .
Conditions subjective (self-client): select the apartment with size and price matching budget.