Take on bank debt to buy a house or rent for life?

For first-time home buyers, with little financial savings, borrowing money to buy a home or continuing to rent is a crucial decision. The challenges, difficulties, and solutions to this problem have been “dissected” by experts and businesses in the workshop on “Solutions to meet housing needs for young customers” that recently took place.

Many apartment buildings are built in Vinh City. Photo courtesy

Want to buy but encounter many obstacles

A study by Vina Research shows that young customers buying a home for the first time are usually between the ages of 25 and 35, buying a home for the purpose of having a stable place to live or when starting a family (accounting for 65% of the purpose of young people when buying a home).

Young customers who can afford to buy a house are those who are working and have income. According to Dr. Bui Quang Tin, Faculty of Business Administration - Banking University of Ho Chi Minh City, Vietnam currently owns a "golden" population resource with the age group from 25 - 45 accounting for 32.23%, of which more than half are 25 - 35 years old. In Ho Chi Minh City alone, more than 50,000 people get married each year, so the demand for housing from this group is very large.

Young people buying a house for the first time are one of the potential customers of the real estate market today. However, they are facing many difficulties and obstacles when deciding to own a house. Among those obstacles are financial and product selection.

Need support policies from banks and investors

According to Dr. Bui Quang Tin: “Currently, banks usually have two forms of debt repayment, which are installment payments with decreasing balance and periodic interest payments, principal payments at the end of the term. The periodic installment payment method with decreasing balance is considered more suitable for the need to buy a house to live in and for customers with a stable source of income.”

However, Mr. Tin said that currently, banks have not really supported young customers when borrowing to buy a house. Regarding the financial difficulties of young customers today, Mr. Le Minh Hoang Long, Faculty of Business Administration - Banking University of Ho Chi Minh City shared: "The biggest difficulty is having to accumulate enough minimum capital to buy an apartment, accounting for 30% of the apartment value, most customers have to manage this amount themselves. The remaining 70% often have to borrow from the bank."

“One advantage is that currently investors are all linked with banks with very easy loan procedures, however the difficulty comes from loan interest rates and payment ability,” Mr. Long added.

Construction site of CT2A and CT2B apartment buildings in Vinh City. Illustrative photo

On the business side, Ms. Do Thu Diem, CEO of Vietcomreal Company said: Currently, the company offers many incentive and support programs for home buyers with no interest (0% interest rate) because the investor will pay interest on behalf of the customer until receiving the house.

However, according to Ms. Diem, to encourage young people to buy houses, in addition to investors offering reasonable prices, there needs to be support from banks. Because currently, lending interest rates in Vietnam are high. "If the interest rate is 6%/year, mid-range and high-end real estate will have good liquidity and solve many headaches for the country such as inflation, overloaded infrastructure... At the same time, it is easy to resettle housing, when people move into apartments and reserve larger land funds to expand roads, build highways, and develop infrastructure", Ms. Diem expressed her opinion.

Young people must have the will to buy a house and save.

To be able to settle down and make a living, in addition to the favorable conditions from the State, banks and investors offering policies for young customers, young people also need to make their own efforts.

“Young people themselves need to have three things: determination and will to build a house; and a plan to buy a house,” said Mr. Le Hoang Chau, Chairman of the Ho Chi Minh City Real Estate Association.

Dr. Dinh The Hien also gave advice to young people when buying a house to ensure 3 factors. First, for a stable family income of over 20 million, they should think about buying. Currently, apartments with prices from 800 - 1.5 billion VND are suitable for young customers. However, if you want to buy a house, you must first save at least 20 - 30% of the apartment's value before buying.

Second, choosing a house requires combining factors such as: Income + location + usage needs. In which, finances must be guaranteed, that is, you should not buy a house beyond your ability to pay (buying a smaller area...). In which, the installment payment must be less than 40% of the total monthly income to be acceptable.

Third, in the first 2 or 3 years, you must accept to reduce all spending (no new things, no new cars, no travel, no entertainment...), and use the maximum amount of money for payments and reserves. Consumption should be at the lowest level, then slowly return to normal.

vietbao.vn