Why do many banks offer a very preferential home loan program but still many people are in a situation of debt squeeze?
Should or should not borrow money from the bank to buy a house, there really is no fixed answer. But the answer is different depending on the situation of each person. But in general, anyone who intends to borrow money from a bank to buy a house must carefully consider and pay attention to many things. Here are some tips for those who want to borrow money from a bank to buy a house.
Interest rates on home loans are very favorable, should you borrow comfortably or not?
High-class apartment housing is an essential need of young families. But they are the object of high solvency and need the support of the bank. Banks can offer a loan program with extremely favorable bank loan interest rates. Loan interest rates range from 7-8%/year. In addition, the loan amount is also quite large. Even loan 70%, 80% and some places lend 90% of the apartment value.
This sounds tempting, but it’s not. Too large a loan creates great pressure, too long repayment time is not an advantage but a big risk. Experts recommend that you need to own at least 30% of the apartment value, ie borrow up to 70%. The rest is to borrow money from the bank to buy a house.
However, the ideal level is still 50% loan, you can easily control the repayment amount, loan interest rate, payment time. Especially at this loan level, you can still have enough living expenses for the repayment period.
Note: Loan interest rates are always floating
Interest rates on home loans are often very attractive. Maybe only at 7-8%/year. However, most banks only apply this preferential interest rate for about 6 months or at most 1 year. The remaining debt will apply floating interest rates according to the market. The calculation of the floating bank loan interest rate is: Loan interest rate = maximum deposit interest rate of the bank + 4%.
You can find this interest rate very high if your debt level is up to 80-90% of the home’s value. The amount of monthly debt payment is also stressful and leads to many families being forced to pay their debts.
In addition, some banks also change the maximum deposit interest rate quarterly. Therefore, before borrowing money to buy a house, it is necessary to carefully consider the change in interest rates over the years…
Have money to pay the principal early before the loan term to reduce interest. But be careful with the penalty
Normally, customers who borrow money to buy a house can pay off their debt within the first 5-7 years. Because no one wants to suffer from long-term debt and risky bank interest. In addition, the bank has introduced a penalty policy for debt payment before the contract to ensure the interests of the bank.
You need to carefully calculate the penalty payment with the interest you have to bear in that degree, whichever is greater. The opportunity cost should be factored into this consideration to make the decision more accurate. Usually the penalty is 5% of the principal amount if you cancel the loan in the first 3 years. In the following years, the fine will be from 2-3%. Some banks apply no penalty policy after 5-6 years.
Some notes when you get a bank loan to buy a house by mortgaging the house you just bought
Before handing over the new home title documents to the mortgage bank, you need to notarize all of them in multiple copies. There are many issues that need these house title papers such as changing the owner of electricity, water, household registration. Because only when you pay off the bank debt, they will do the mortgage release procedure and return the pink book to you.
>>> See more: There are 7 notes that can’t be forgotten when getting a home loan
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