NOTES WHEN LOANING A REAL ESTATE MORTGAGE

You need a bank loan in the form of a real estate mortgage, or a land use right certificate (red book) in your name. First of all, you need to clearly understand some of the following points:

A real estate mortgage loan is a form in which you use property as collateral to the bank to borrow a certain amount of money from the bank. Assets can be land, houses, structures, or other assets attached to land or houses. The above-mortgaged property must belong to the legally recognized ownership of the borrower or you can mortgage it with another persons property under the condition of blood relationship (parents, siblings).

Common purposes of using loans are business loans (used by businesses), consumer loans (popular with unsecured loans, because of small loan amounts and quick procedures), real estate loans, and construction loans. Repair house. For each purpose of using loan capital, loan procedures will be different. You can easily find this information on the banks websites or go directly to the branch for support.

The maximum loan amount is usually 70-90% of the value of the collateral. The bank will approve the loan limit so that your total monthly principal and interest payments do not exceed 50% of your income (to ensure repayment ability). However, from the perspective of personal financial management, I think your monthly principal and interest payments should only be about 30% of your income to ensure financial security.

The normal loan term will be from 5 to 30 years. You should leave the loan term as long as possible to reduce monthly financial pressure. You can reduce the actual interest when you reach the point where you wont be fined by the bank for prepayment fees (usually the first 4-5 years) by increasing the monthly principal payment to the bank.

Regarding collateral, I have a few notes as follows. Most banks use valuation services from companies operating according to the Ministry of Finance regulations. These companies all have the expertise and expertise to conduct an objective and independent valuation of your property. However, if you are not satisfied with the valuation results of this company, you can ask the bank to use a valuation result that you feel more confident about.

If the collateral is real estate with a house or construction on the land, the loan application is likely to be approved more easily than if the collateral only includes land. For real estate with a house or construction on the land but not shown on the land use right certificate, this part of the house or construction will not be included in the value of the secured asset. If the land plot map has not been updated on the certificate, you need to go to the district land office to request an extract of the location measurements.

When using real estate as collateral, you should not have financial obligations to the State such as land use fees, fees. Because this will affect the loan application approval results.

In addition, I have some other notes when borrowing. State-owned or foreign banks will often have lower lending interest rates than small-cap banks. The reason is that these banks can mobilize deposits at low interest rates, leading to the application of lower lending interest rates. When choosing a loan bank, you should compare penalty fees, late payment fees, insurance fees, and accompanying loan conditions.

Doan Hong Ngoc

Personal Financial Planning Expert
FIDT Investment Consulting and Asset Management Company

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