The problem of buying a house for one billion dong but only having 500 million

The monthly interest and principal payment to the bank should be less than 50% of total income to ensure the ability to pay the bank while still covering the family's living expenses.

Mr. Thanh Ha (Go Vap District, Ho Chi Minh City) wants to move out when his first son is 7 years old and needs more space for living and studying. Currently, he and his wife live in a small house with his parents, so they face many inconveniences. Through the process of saving and support from both families, the couple has 500 million and is looking for an apartment worth about 1 billion VND in districts far from the center.

"The remaining 500 million VND must be borrowed from the bank. Our monthly income is about 18 million VND, which is not high compared to the expensive urban living standard. Therefore, how to ensure the ability to repay the debt is not simple," said Mr. Ha.

He calculated that since he was still living with his parents, he would not have to pay rent. He tried to keep his living expenses at 10-12 million a month, with the remaining amount to pay interest and principal to the bank of 5-7 million. Thus, his salary would be gone every month, and when expenses arose, he would have to borrow again.

According to financial experts, Mr. Ha's concern is also a common concern of young people who want to have a place to live. To avoid getting "stuck" when borrowing to buy a house, you should not "catch a thief empty-handed" but need to have savings of at least 30% of the property value. AvoidBorrow more than 50% of the apartment valueensure the ability to repay the loan. The monthly interest and principal payment to the bank should be less than 50% of the total family income.

Another important point to consider is how the interest rate will change. Typically, the first year interest rate is only around 5%, which makes many people think that this rate will apply throughout the loan term. However, after the initial preferential period, the interest rate usually adjusts to the actual interest rate on the market. Therefore, it is necessary to evaluate the market fluctuations to have a suitable financial plan in the future.

Currently, the supply of apartments that meet the financial capacity of young people is quite abundant. This is also a segment that many investors focus on. For example, in early July, Him Lam launched 400 apartments for young people in the Him Lam Phu Dong residential area project, located right on Pham Van Dong Avenue, the center of Thu Duc district. All apartments have an area of ​​60-65m2, 2 bedrooms, selling price 1.1-1.2 billion VND. The apartments have "affordable" prices for young people but still have a modern design, completed with materials and equipment from famous brands such as ToTo, Kohler, Teka... Accompanied by a diverse system of utilities including swimming pool, restaurant, kindergarten, sports area, gym, walking path, medical care area.

At the end of May, the River City apartment project in District 7 was opened for sale by Phat Dat and An Gia Investment together with Creed Group with more than 8,000 units, targeting young people, workers and civil servants with stable income, priced from 1.4 billion VND per unit, area from 47m2. Or Novaland, which has strength in the high-end segment, also invested in the mid-range RichStar apartment complex in Tan Phu district. The apartments here have diverse areas of 53-94m2, priced from 1.39 billion VND, delivered with basic finishing and many amenities.

In 2016, Him Lam Land opened for sale nearly 2,000 apartments priced at 1-1.5 billion VND, concentrated on main roads such as Pham Van Dong Avenue, Hanoi Highway, Vo Van Kiet Avenue...

Mr. Le Hoang Chau - Chairman of the Ho Chi Minh City Real Estate Association commented that for the real estate market to develop sustainably, it is necessary to provide many products to meet the needs of the majority, especially the young. Therefore, the fact that many investors focus on mid-range projects priced from one billion VND per unit, meeting the needs of those who want to buy real houses is a positive signal for the market.

"I think that building houses for young people has less risk. This is a dynamic class, through the process of working and accumulating, their income will increase over time. If there are suitable sales policies such as installment payments in 20 years, preferential loans, then product consumption is completely feasible," said Mr. Chau.

Sharing the same view, Mr. Ngo Quang Phuc - Deputy General Director of Him Lam Land Company assessed that the housing segment for young people has great potential because of high demand but limited supply. One of the difficulties of enterprises is finding suitable land funds to develop 65m2 apartment complexes priced at 1-1.5 billion, especially in the central area. It is necessary to have elaborate preparation and long-term strategy to invest effectively in this segment.

"In addition to business issues, building houses for the middle-income segment also has great significance in terms of social security, contributing to diversifying products for the market and limiting the imbalance between supply and demand," Mr. Phuc emphasized.

Real estate experts believe that the market will welcome many mid-range projects, diversifying products to meet the practical needs of users. However, in order for customers to effectively access mid-range apartments, businesses also need support, especially financial measures.

Ms. Duong Thi Thuy Dung - Director of CBRE Research and Consulting Department assessed that the affordable and mid-range segments are very popular in the market. With the support of the banking system and the committed interest rate within the first 1-2 years of about 6-7% and the flexible sales strategy of the investor will stimulate home buyers in this segment.

Mr. Ngo Quang Phuc - Deputy General Director of Him Lam Land Company also acknowledged that the biggest limitation of young people is that the initial savings are still small. Therefore, the company has a sales policy with long-term payment support methods. For example, at the beginning, the buyer pays 10% (about 120 million) to sign the contract. From this time until receiving the house (about 18 months), pay an additional 35%, equivalent to 380 million VND. At the time of receiving the house, the customer has about 50% of the apartment value left. At this time, the company supports buyers to pay in 2 years without interest (2% per month) or pay in 4 years (1% per month) with a fixed interest rate of 6% per year for 4 years. Thus, paying 12-15 million VND per month can own a house.

"Young people should boldly buy a house if they have savings and a stable income. Although there is pressure, it will motivate them to try harder at work to increase their income and also have a better sense of saving," Mr. Phuc shared.

Him Lam Phu Dong has completed the foundation. Actual photo taken at the project in July 2016.

In addition to financial issues, when buying a house, young people also need to pay attention to factors such as: the project has a convenient location for travel, traffic infrastructure, traffic jams. In addition, the apartment complex needs to have facilities for daily life such as supermarkets, cafes, swimming pools, gyms... or facilities for children such as playgrounds, parks, kindergartens... to ensure a safe, convenient and time-saving living environment.

According to the HCM City real estate market research report published by CBRE, in the second quarter of 2016, the apartment market supply continued to increase strongly with more than 10,107 new units, an increase of 20% compared to the previous quarter. Of which, the new supply of the mid-range segment had the highest proportion, accounting for about 41%. Mid-range projects also recorded good business results, reaching 37% of the total consumption of the whole market, the highest in all segments. The number of apartments handed over in the next 18 months is expected to have an average growth rate of up to 200%. The market is bustling in the second half of the year when investors launch many new projects.

According to VNE