Apartment Installments: A Handbook for Young People and Families

Owning a dream apartment is no longer a distant matter with the form of buying an apartment in installments. This is a smart financial solution, especially suitable for young singles, nuclear families, and first-time homebuyers. This article will provide complete knowledge about buying an apartment in installments, from conditions, documents, procedures to important notes. We will explore together how to realize the dream of settling down.

Buying an apartment in installments: Golden opportunity to settle down

The real estate market is always fluctuating, and accumulating enough large sums of money to buy a house immediately is a significant challenge. However, with the development of financial products, buying an apartment in installments has become an attractive option. This form brings many outstanding advantages, helping many people get closer to their own roof.

First, the procedure for borrowing to buy an apartment in installments is increasingly simplified. Many banks and investors have optimized the process to make it easier for customers to complete the necessary documents. Furthermore, current interest rates on apartment loans are also quite attractive, ranging from 5.5 – 13%/year depending on the policies of each bank and the loan term. A long loan term is also a great advantage, helping to reduce monthly financial pressure.

Practical benefits of choosing an apartment in installments

One of the biggest benefits of buying an apartment in installments is that you don’t have to pay the entire value of the apartment immediately. This helps reduce the initial financial burden, which is especially important for young people just starting their careers or young families.

Ms. Lam Thi Thao (Hoang Mai, Hanoi) shared that buying an apartment in monthly installments helps her family reduce significant financial pressure. More importantly, she can still use her own home instead of having to spend money on monthly rent. This is a double benefit, both having a stable home and saving costs.

In addition, owning an apartment also helps you build personal assets. Over time, the value of real estate can increase, bringing potential profits. Therefore, buying an apartment in installments is not only a solution for housing needs but also a smart long-term investment.

Conditions you need to know to borrow to buy an apartment in installments

To be able to borrow to buy an apartment in installments, buyers need to meet certain basic conditions. These conditions are aimed at ensuring debt repayment ability and transparency in transactions.

Basic requirements from the bank

Usually, banks will require borrowers to be Vietnamese citizens, from 18 years old or older at the time of loan registration. You also need to have civil legal capacity and civil act capacity according to the provisions of law. These are mandatory legal factors for conducting any financial transaction.

Most importantly, you need to have a stable income source that matches your monthly payment ability. The bank will review your income to assess your repayment ability. Therefore, preparing documents to prove income is very necessary.

However, it should be noted that each bank may have its own specific regulations on loan conditions. Therefore, you should contact the bank you are interested in directly to receive detailed and most accurate advice. Talking with a consultant will help you better understand the specific requirements.

Documents and procedures for borrowing to buy an apartment in installments

After meeting all the conditions, you need to prepare a complete set of documents and follow the loan procedure. This process usually includes the following basic steps:

Necessary documents

A set of documents for borrowing to buy an apartment in installments usually includes:

• Application for a home loan.
• ID card/Citizen identification card, household registration book or other personal documents.
• Documents proving income: Labor contract, salary slip, bank account statement…
• Documents related to the property to be purchased (purchase contract, legal documents of the apartment).
• Other documents as required by the bank.

Steps to implement the loan process

The process of borrowing to buy an apartment in installments usually takes place as follows:

1. Submit documents: You submit a complete set of documents to the bank.
2. Appraisal of documents: The bank will conduct an appraisal of information and your financial capacity.
3. Notification of results: The bank will notify the loan approval results.
4. Disbursement: If the documents are approved, the bank will proceed with disbursement according to the agreement.
5. Receive the house and repay the debt: You receive the house and begin to fulfill your monthly debt repayment obligations.

In addition, you can learn more about a detailed handbook for first-time homebuyers to have a more general view of the journey to owning a home.

Understand the interest rate on apartment loans

The interest rate is an important factor that directly affects the total cost you have to pay when borrowing to buy an apartment. Understanding how to calculate and the factors that affect interest rates will help you make a smart decision.

Popular interest rate types

Currently, banks usually apply three main types of interest rates:

• Fixed interest rate: This interest rate is kept the same throughout the period specified in the contract. This brings stability and easy financial forecasting.
• Floating interest rate: This interest rate will change according to the financial market. The floating interest rate is usually calculated by the base interest rate plus a fixed interest rate margin. The base interest rate fluctuates according to factors such as the capital mobilization market and economic growth.
• Hybrid interest rate: This is a combination of fixed interest rates and floating interest rates. For example, a fixed interest rate in the first few months, then switching to a floating interest rate.

How to calculate loan interest according to the decreasing balance

The method of calculating interest according to the decreasing balance is the most popular. With this method, the amount of interest is calculated on the outstanding balance after each payment period. Therefore, as the outstanding balance decreases, the amount of interest you have to pay will also decrease.

The formula is as follows:

Amount to be paid monthly = Principal debt divided equally by month + Interest calculated on the remaining balance

In which:

• Interest for the first period = Loan amount x Interest rate for the period / 12
• Interest for subsequent periods = Remaining balance x Interest rate for the period / 12

Example: You borrow 800,000,000 VND, term of 120 months (10 years), interest rate of 8.5%/year on the decreasing balance.

• Principal to be paid each period = 800,000,000 / 120 = 6,666,666 VND/month.
• Interest paid in the first month = 800,000,000 x (8.5 / 12) = 5,666,666 VND.
• Total amount paid in the first month = 6,666,666 + 5,666,666 = 12,333,332 VND.

After the first month, the outstanding balance decreases, so the interest for the following months will also decrease. This helps you reduce the financial burden over time.

Important notes when buying an apartment in installments

Buying an apartment in installments is a big financial decision, so you need to be very alert and carefully consider. There are potential risks that buyers need to anticipate to avoid difficult situations later on.

Be careful with preferential interest rates

Many homebuyers are attracted by attractive initial preferential interest rates, such as 7%/year or 8.5%/year. However, Mr. Tran Hoang, a real estate broker in Hanoi, warns that this interest rate is usually only applied for a short time, possibly only 1 year or the first few months. After that, the interest rate may increase significantly, sometimes up to 3-4% compared to the initial rate. Therefore, you need to clearly ask about the interest rate policy after the preferential period and calculate your long-term payment ability.

Assess your actual financial capacity

According to Onehousing, to avoid the worst situation, homebuyers need to carefully consider their payment ability. Assess based on financial resources after deducting essential monthly living expenses. Ensure that the monthly installment does not exceed 50% of your income, as advised by Mr. Tran Hoang.

Having a stable income source and reserves is extremely important. If income is uneven or fluctuates greatly, you may have difficulty paying, leading to having to sell your house at a loss.

Choose the appropriate segment and price range

Onehousing also offers suggestions on the segment and price range suitable for homebuyers in installments based on income:

• Income from 30 million VND/month or more: Suitable for the high-end apartment segment, prices ranging from 53 – 70 million VND/m2.
• Income from 20 million VND/month: Suitable for the mid- to high-end apartment segment, prices from 35 – 52 million VND/m2.
• Income of at least 15 million VND/month: Suitable for the mid-range apartment segment, selling price from 20 – 35 million VND/m2.

Choosing an apartment that suits your financial capacity will help you avoid debt pressure and enjoy a stable life.

Frequently asked questions about apartments in installments

Conclusion

Buying an apartment in installments is an effective financial solution, opening up home ownership opportunities for many subjects, especially young people and nuclear families. However, for this journey to go smoothly, you need to equip yourself with complete knowledge, carefully consider your financial capacity and choose a suitable loan product. Stay alert to attractive offers and always put long-term financial stability first.