Loan policy to support housing and residential land for poor ethnic minority households in Vietnam

The government has just issued Decree 28/2022/ND-CP introducing preferential credit policy for implementation of the National target program for socio-economic development of ethnic minority and mountainous regions in 2021 – 2030 period, stage 1: from 2021 to 2025. In particular, loan policy to support housing and residential land for poor ethnic minority households in Vietnam is as follows:

Loan policy to support housing and residential land for poor ethnic minority households in Vietnam (Illustration)

1. Borrowers

The following entities are entitled to get preferential loans for purchase of residential land:

- Poor ethnic minority households.

- Poor Kinh ethnic households lawfully residing in extremely disadvantaged communes or villages in ethnic minority and mountainous regions.

2. Eligibility requirements for a loan in Vietnam

A borrower is required to meet the following eligibility requirements to get a loan:

- The borrower has a lawful residence in local area and has their name included in the list of households eligible for land supporting policy approved by a competent authority.

- The representative of the borrowing household must be at least 18 years old and have full legal capacity as prescribed by law.

- The borrower’s borrowing plan is appropriate to the intended loan purpose.

3. Loan purpose

- For loans to support residential land: Customers are allowed to borrow capital to use to cover the cost of acquiring residential land.

- For loans to support housing: Customers are allowed to borrow funds to use to cover the costs of building new or repairing or renovating houses.

4. Loan amount

The loan amount shall be agreed upon by the Bank for Social Policies of Vietnam and the borrower but shall not exceed:

+ 50 million VND/household (for residential land support loans).

+ 40 million VND/household (for housing loan)

5. Loan term in Vietnam

The specific loan term shall be agreed upon between VBSP and the borrower but shall not be longer than 15 years. Within the first 5 years, the borrower is not required to pay the loan principal.

6. Loan interest rate in Vietnam

- The lending interest rate is 3%/year.

- The interest rate charged on overdue debts is 130% of the lending interest rate.

Note: Borrowers must fully meet the loan conditions as prescribed, use the loan capital for the right purposes, repay the loan principal and interest in full and on time as agreed in the credit contract. Borrowers are not allowed to transfer residential land use rights, production and housing land use rights during their outstanding loans at the Bank for Social Policies of Vietnam.

Decree 28/2022/ND-CP takes effect from April 26, 2022.

Bao Ngoc

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