Excel table to calculate interest when borrowing money to buy a house on installments in 2022? Important notes when buying a house on installments?
Regulations on installment sale of housing?
As for the regulations on buying houses on installments, Article 125 of the Law on Housing 2014 of Vietnam specifies as follows:
“Article 125. Installment sale of housing
1. The installment sale of housing shall be agreed by contracting parties and stated in the housing sale agreement; within the installment period, the housing buyer shall exercise his right to use the house and fulfill obligations to maintain that house, unless that house is under warranty period as prescribed in this Law or otherwise agreed.
2. The buyer buying house by installments may not conduct transactions in housing sale, giving, exchange, mortgage, or capital contribution with other person until he/she pays off the total amount, unless otherwise agreed.
During the installment period, if the buyer dies, his/her lawful heir(s) may exercise rights and fulfill obligations of the buyer, when the heir(s) pay off the total amount to the seller, they shall be granted the Certificate.
3. If the buyer wishes to return the house during the installment period and the seller agrees, both parties shall agree about the method of house return and the refund of the housing payment.”
Important notes when buying a house with installments?
Note on payment progress:
According to the provisions of Article 57 of the Law on Real Estate Business 2014 of Vietnam stipulating that:
“Article 57. Payment for off-the-plan real estate sale or lease purchase
1. The off-the-plan real estate sale or lease purchase shall be paid by installments, the initial installment do not exceed 30% of the agreement value, the next installments shall be conformable with real estate construction progress provided that total installment does not exceed 70% of the agreement value if the building has been not transferred to clients; if the seller or the lessor is a foreign-invested enterprise, the total installment does not exceed 50% of the agreement value.
If the buyer or the lessee has been not granted the Certificate of land, ownership of land and property on land, the seller or the lessor shall not collect payment not exceeding 95% of the agreement value from the buyer or the lessee; the remaining value shall be paid when the buyer or the lessee is granted the Certificate of land, ownership of land and property on land by competent agencies.
2. The investor must use the option fee given by clients for proper purpose as committed.”
According to the above regulations, you need to note that when the house is in the construction phase, the buyer pays 30% of the contract value for the first time, the next installments must be consistent with the construction progress of the project but the total not more than 70% of the contract value.
In case you have not been issued a book, the total payment will not exceed 95% of the contract value, the remaining 5% will be paid when the book is issued.
Note the safe loan threshold:
Banks often launch lending policies with the condition that "only need to have an initial amount of 20% or 30% of the value of the apartment" to be able to borrow money from the bank and be paid in installments within ... years.
When you agree to borrow up to 70% or 80% of the value of the apartment, the amount of interest that you have to pay every month is very heavy and for a long time, it is very likely that you are only "working to pay interest to the bank".
Notes on floating interest rates:
In case a bank has a preferential policy of exempting/reducing loan interest for a certain period of time, the most common is the exemption of loan interest for the first year, after the preferential period, the interest rate may be "floating", it means the interest rate will vary depending on the margin and regulations of each bank.
Note about early payment penalty fee:
In case you borrow to buy a house in installments and you commit to paying within ... years, but you are able to pay in an earlier time than your commitment, you will have to pay a penalty fee for early prepayment to the bank.
Usually, this fee ranges from 0.5 to 3.5% of the total amount of prepayment, depending on the bank.
Excel table to calculate interest when borrowing money to buy a house on installments in 2022
Excel table to calculate interest when borrowing to buy a house in installments in 2022?
Suppose you buy a house worth VND 1.7 billion, you have a need to borrow 700 million, the loan term is within 10 years, you get preferential loans for the first year, the loan interest rate after the preferential period. 9.6% per year.
The specific payment schedule is as follows:
+ Phase 1 (after deposit): 20% of the contract value, equivalent to VND 340 million
+ Phase 2 (After 30 days): 10% of the contract value, equivalent to VND 170 million
+ Phase 3 (bank disbursement): 65% of the contract value, equivalent to VND 85 million
+ Phase 4 (making Certificate of land use rights, ownership of houses and other land-attached assets): 5% equivalent to VND 85 million.
Download the Excel file of the interest rate table when applying for a home loan: Here.
Based on the above excel file:
+ You need to pay more than VND 5.8 million/month of the principal within 12 months (This amount is due to the interest exemption)
+ The highest payable amount is VND 10.8 million/month of principal and VND 5 million/month of interest.
The amount of principal and interest is gradually decreasing and until the last month, the remaining amount to be paid is VND 5.8 million of principal and VND 46,600 interest.
Here is some of the information we provide to you. Best regards!
LawNet
