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| Home » Country Based Mortgages » Mortgage in Vietnam |
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Mortgage in Vietnam |
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Since the economy of the country of Vietnam is in the stage of development and progress, Mortgage in Vietnam is not in a state of great flourish. But it is slowly and surely catching up to the fancy of the Vietnamese. The field of Vietnam Mortgage is not very large, owing to the fact that taking loans is still not a very common process among the people of Vietnam who want to buy a house. Another reason behind this is that private ownership of a piece of land is not allowed in the country of Vietnam. The Constitution of the country and the Land Law says that the land is people's property which is managed by the state administration. Therefore, the people residing in Vietnam can have access to lands only through allocation or lease, granted by the government. Even foreigners can can lease a land, but not more than 50 years.
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Since this sector of Mortgage in Vietnam is not that popular, the process is primarily carried out by foreign commercial banks along with the state-owned VietComBank. Due to the absence of land ownership rights for individuals, the bank giving loans are to be affianced with the property rights. In Vietnam Mortgage, the ratio of loan-to-value can be a maximum of 50%. This can be stretched to 60%, if the applicant is in a very good financial condition. This rate is relatively lower than that of developed countries, where it is around 80 – 90%. This is mainly due to the fact that the risk involved in Vietnam is higher than in developed countries in case the borrower could not pay back.
The Asian Development Bank has come forward to help Mortgage in Vietnam. The Asian Development Bank is making a total assessment of the sector of housing finance in Vietnam. Vietnam Mortgage rate is at the highest of 9.5%. Usually the rate of interest is higher for FRMs than ARMs.
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