Nowadays, Vietnamese government policy is more open to foreigners, especially loan of buying house that brings them more opportunities of owning properties and living permanently in Vietnam.
1. Foreign loan regulations in Vietnam
Pursuant to the Law on Credit Institutions of Vietnam stipulates that foreigners borrow money as follows:
- You must have full civil legal capacity, act and liability in accordance with the law.
- Prove the purpose of using the legitimate loan source, by: property sale and purchase agreement, documents proving the lawful property use purpose...
- Strictly comply with regulations on loan security regulations and the guidance of the State Bank.
- Prove your ability to repay the loan on time as committed.
- Prove the feasibility of the your current business or job.
2. Procedure of the foreign loan
- Notarized copy of the passport of the foreign individual who needs a loan.
- Passport, visa/Temporary residence card with visa/Work permit… or Permanent residence card with the period of being allowed to reside in Vietnam for at least 3 months.
- Certificate of temporary residence and residential address in Vietnam.
- Confirmation letter of the authorized agency about the personal information of the borrower currently residing in Vietnam.
- Copy of marriage certificate (in case of married foreign individual).
- Proof of stable income and ability to repay bank loans: bank account statement for the last 3 months, original salary notice, copy of detailed property tax payment.
NOTE: In case you are with a guarantor or a Vietnamese spouse, the following documents need to be prepared:
- Registration form for guarantor information issued by the bank.
- Notarized copy of ID card or Passport of guarantor.
- Copy of marriage certificate with Vietnamese spouse.
3. Recommended local banks to apply for the loan
Normally, banks support the loan of buying properties from 70 - 80% of the property value after assessing. You must have 30% of the left.
Preferential lending interest rates are adjusted by banks to change quite often every 03 to 06 months. Depending on the time, the interest rates between banks may differ by 1-2% per year.
Because interest rates change periodically, it is difficult to determine which bank is the best because in addition to interest rates, other policies such as penalty fees for early repayment, loan amount, loan term, and asset valuation are also need to consider.
There are 2 suggested groups to choose the bank for loan:
| Stable Interest Rate Banks | High asset valuation Banks |
| Shinhanbank, Hong Leong Bank, Standard Chartered, HSBS, BIDV, Vietcombank, Vietinbank, Agribank, Techcombank, ACB | BIDV, TPBank, Sacombank, Eximbank, VIB, VPBank, SCB, Seabank, MBbank |
4. Advices to first buyer taking loan
- Even though bank offer the loan 70-80% of property's value, you should borrow up to 50% only to stay away from monthly stress of debt pressure.
- Usually loans term is over 5 years which has the same interest rate so that it is better to choose the longest loan period possible to reduce the monthly principal amount to the lowest.
- The capital is fixed, but the bank's loan interest is often floating. Please note that the preferential interest rate is very attractive, only 7.5-8%/year, applied for the first 6-12 months only usually. From the 13th month onwards, the interest rate will be adjusted up by about 3.5-4% depending on each bank and each borrower.
- To avoid a floating rate trap, you should estimate under the assumption that interest rates could rise as much as 30% as well as anticipate some unexpected unexpected costs. Thus, not 100% but 150% saving for payable amount to bank montly.
- Banks charge a fee for early payment, usually a penalty of 1-3% on the amount of early payment. Most of the banks offer a low interest rate, they will attach a high penalty to compensate for the loss of the initial preferential interest rate. Therefore, if you choose a project or townhouse that the bank guarantees and commits not to pay a penalty for early repayment, you will save a considerable amount of money.
- Besides, maintaining your income, buying with clearly purpose and doing self-assessment of solvency are also recommended to consider when you decide to take a bank loan.