Should not borrow money from bank to invest in real estate

Real estate has not yet recovered firmly and is very unpredictable. If you risk borrowing money from the bank to buy real estate worth billions and then incur a debt of hundreds of millions each month, it will be very risky.

Real estate investment is currently only suitable for those with large capital, but borrowing will be very risky. Illustrative photo

Financial expert Dinh The Hien assessed that the interest rate of 8-10% per year for real estate loans of 5-10 years is relatively reasonable, and it is difficult to demand a reduction in the next one or two years. Some projects with interest rate support below 6% in the early period are also considered very attractive.

However, according to him, investors must consider their financial capacity and income to repay the loan because real estate investment today has very little opportunity to use debt leverage to make short-term profits. "That's not to mention the fact that some projects offer high selling prices and then offer interest rate support to attract buyers," he said.

Independent economist Huy Nam also commented that borrowing from banks to invest in real estate at this time is extremely risky. Signs of inflation have improved, the depreciation rate has decreased, but the difficult story is still ahead. Therefore, investors cannot be optimistic about the recovery of the real estate market and the stability of lending interest rates.

According to Mr. Nam, if you know that the market will stabilize in the next 3-4 or 5-6 months, borrowing is beneficial, but the difficulty is that no one can predict when the real estate market will stabilize. Assuming that the downturn lasts for several years, borrowing from a bank will be a failure. "Most home loan packages have relatively high interest rates and often fluctuate strongly for a long time afterwards," he said.

Dr. Dinh The Hien also analyzed that the real estate market has had a clear positive change compared to the recent period, but it is not a recovery to return to the vibrant period of 2006-2009 as many speculative investors expected.

"It will be difficult for any real estate to increase in price well this year for short-term investors to make a profit. The current market only has good liquidity in some areas and projects that are highly appreciated for their location, products, investor brand and reasonable prices," he said.

However, for those with real money, experts say that this is an opportunity because real estate is basically returning to its real value. Compared to capital preservation channels such as gold, USD or making profits from bank deposits and stock investment, real estate investment can be considered quite attractive because there are many good types and reasonable prices to choose from.

"Those who have real money, capital, and do not have to borrow money from banks will be able to buy real estate at its true value. Later, when the macro economy is more stable and real estate is vibrant again, prices will be higher and selling will definitely be profitable," said an economic expert in Ho Chi Minh City.

In addition, experts also assess that for those who have real housing needs and have a source of funds of more than 30% of the value of the house they plan to buy, have a stable source of income, and ensure the ability to repay the loan, this is also the right time to buy.

According to VnExpress