How to Get a Property Loan in Vietnam: Foreign Buyer’s Guide

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Vietnam’s property market is hot and massive infrastructural projects are planned in places like Hanoi and Ho Chi Minh City. The new metro lines and other investments help to drive up the property prices, rental yields can range up to double digits.

Investors sometimes ask me whether it’s possible to receive local financing to buy property in Vietnam.

I decided to do more research and write this article, where I explain how to finance your property in Vietnam as a foreigner.

In short, it’s difficult to own property in Vietnam and impossible to own land without Vietnamese citizenship.

But here’s the good news: Even when foreign ownership is not favored, you can still get property financing through several emerging real estate companies that offer a better alternative.

There are several alternatives to home financing in Southeast Asia that provide a different route to loans and financing at the moment. Perhaps the market leader is Homebase, a leading Southeast Asia Proptech company that offers services in Vietnam.

They’re backed by multiple billion-dollar global funds, work smoothly with foreigners, and offer a simple way to help homeowners-to-be to fund their dream home, regardless of nationality and monthly income levels.

Can foreigners get traditional bank mortgages in Vietnam?

I’ve done my research and been in contact with local branches to understand what regulations that apply.

Truth be told, even if the Vietnamese property market opened up since 2015, and I’ve seen a great interest in the market, it’s still not that easy to get a local mortgage from traditional options unless you fulfill any of the following criteria:

• You are married to a Vietnamese spouse
• You are an Overseas Vietnamese person, sometimes referred to as Viet Kieu
• You have a residence card. However, these are only valid for 3 years and the loan normally needs to be paid back before the expiry

Despite the fact that it’s becoming generally more accepted to use mortgages in Vietnam, it’s not as common compared to the Western world, or other developed Asian countries. Saving or pooling money is a more common option.

Things are a bit different in here, maybe you’ve even heard about the past times when Vietnamese paid property with gold.

What financing options do I have when buying property as a foreigner in Vietnam?

If you want to secure financing for a property, you normally have a few options:

• Pay the property in cash
• Seek financing from a bank in your home country, or elsewhere. The easiest option would be to use a margin loan or to mortgage any existing assets
• Seek financing from an alternative company/service provider that has more flexible options like Homebase

The second option is not as common and will require more work and time if you’ll even be capable of finding a bank that allows overseas financing in Vietnam.

Going for an overseas property loan in Hong Kong, Malaysia or Singapore would not be an option either, as these loans are dedicated to purchases in Australia, the UK, Japan, or the US (major cities, and sometimes even on a zone level).

International Banks in Vietnam

If you’re still interested to apply for a local loan, you’ll find the following banks operating in Vietnam:

• HSBC
• UOB
• Standard Chartered
• Citibank
• Bank of China
• Maybank
• ANZ Bank
• OCBC

You’ll also find a handful of local banks that might be able to help. For example:

• Techcombank
• Vietcombank

UOB Loan Conditions

I’ve been in contact with UOB, a major Singapore bank that shares the following loan conditions, with the requirement that you need to be married to a Vietnamese spouse. The same conditions apply to locals.

Interest rate
8% per year

Minimum property value
400 million dong (around USD 17,500)

Maximum loan value (LTV)
70%

Loan tenure
25 years

Application Criteria

According to HSBC’s website, you need to comply with the following regulations to be eligible for a mortgage:

Vietnamese individuals or Viet Kieu

• Age from 18 to 65
• Monthly personal income of at least VND 10 million
• Locations (if property value is VND 800 million)
• Ho Chi Minh City, Ha Noi, Binh Duong, Dong Nai

Locations (if the property value is VND 500 million)

Da Nang, Can Tho, Long Xuyen City, Cao Lanh City, Sa Dec Town, Vinh Long City, Hue City, Hoi An City, Tam Ky.

I recommend that you contact any of the above-mentioned banks directly, to see what they can offer and what regulations apply. The real estate industry is changing fast in Vietnam, and so do regulations and conditions in the mortgage industry.

Foreigners’ Problems to Receive Property Title Insurances

An outspoken problem Viet Kieu’s and foreigners have is the problem of receiving title insurances in Vietnam. As local mortgages are rarely offered to foreigners, and sometimes Viet Kieu’s have problems receiving them as well, they need to look for financing options overseas.

Being able to receive title insurance overseas is practically default, and many local Vietnamese banks require one before you’re able to borrow money.

Due to the problems to receive title insurances in Vietnam, many foreigners and Viet Kieu have been left out of the market, as they’ve not been able to receive financing from their home countries or overseas.

Can I apply for a mortgage through a local Vietnamese company?

It’s possible to open a local company to trade real estate, but the process is lengthy and takes everything from 3-6 months, or sometimes more.

If you decide to open a company, contact a legal firm with experience in helping foreigners who open companies for the purpose of trading real estate.

One example is Domicile Corporate Services, I attended one of their seminars in the past.

In order to get a real estate license, you need to invest around USD 900,000, while the legal service costs around USD USD 5,000 – 10,000. The first step to pay attention to should be to register your investment license from the Vietnam Ministry of Planning and Investment (MPI).

Be sure to work with a consulting firm that knows the regulations in and out and that can help you throughout the process.

An alternative to traditional property financing in Vietnam – Homebase

As mentioned, it’s not always the case to obtain your mortgage through local banks. In this situation, you may want to seek help from an alternative that offers more flexible options like Homebase.

Homebase is backed by prestigious and large funds in Vietnam (VinaCapital – A 3-billion dollar fund) and around the world (Y Combinator, Antler, and more). Recently, they have successfully raised $30 million USD to make homeownership possible across Southeast Asia.

To know more about how they work, I contacted the sales team about the product. They were helpful and spoke fluent English during the conversation. In fact, Homebase has also served foreign clients successfully.

With these in mind, I would say that foreign home buyers won’t have to worry about whether the Homebase team can support you throughout the buying experience.

The process is smooth and takes significantly less time compared to the traditional banks (about 2 weeks to complete all the necessary legal paperwork).

Personally, if you don’t know a great deal about how Vietnamese policies work for foreigners, or simply want a fast track to homeownership, Homebase can be a good choice.

The Process of Homeownership with Homebase

Homebase will facilitate your journey to homeownership. I talked to Homebase and this is how their co-investment plan works to achieve this goal.

• Basically, you are free to choose a property or Homebase can recommend an agent for you
• After a property inspection, Homebase will buy it in cash
• You only need to put in a 20% deposit at the beginning
• Every month, you’ll pay a fixed amount until the end of your contract
• At any moment, you have the option to buy back the entire property. If you don’t want to, you can still walk away at the end of the period and cash out your savings

Here is the infographic to help you think about these steps:

Source: Homebase

Why Homebase is a great alternative to traditional banking options

A major reason is that it is more inclusive in terms of eligibility. Almost anyone can qualify for their plans. To take an example, Homebase serves clients regardless of their nationality and income levels.

They also require a lower deposit rate compared to traditional options. Starting with as little as a 20% down payment, you can already start financing your homeownership.

Homebase Co-Investment vs. Traditional Options

Source: Homebase

With that being said, I would say Homebase is a viable option for foreigners, especially investors looking for a good deal to live and work in Vietnam.

Conclusion

While Vietnam’s property market continues to attract a vast number of foreign investors, I still believe that there’s a lot under pressure from investors who want to enter, but that hesitate as the mortgage and ownership regulations are not favorable.

Although financing property with cash is a preferred option, obtaining financing from an overseas bank to buy property in a developing country like Vietnam is not that easy.

With that being said, you can totally seek help from other innovative solutions for home-buying. In my opinion, for a foreigner who’s looking through multiple financing options, Homebase is a great choice thanks to the flexibility they offer.

Whether you’re a foreigner who finds it difficult to apply for a bank mortgage or an investor who doesn’t meet traditional loan requirements, Homebase can help construct an ownership plan that works for you.

FAQ

Below I’ve listed some commonly asked questions among foreign investors and my replies. If you have any other questions, feel free to contact us. You can also drop a comment below.

What foreign banks have offices in Vietnam?

Increasingly more foreign banks have entered the Vietnamese market in the past years. Some well-known names include HSBC, Shinhan Bank, Bank of China, Maybank, BNP Paribas, and Citibank.

It can be wise to contact banks that are either headquartered or have offices in your home country.

How much is the down payment in Vietnam?

The down payment is typically 30% but varies depending on the banks. You should contact a handful of banks for up-to-date information. If you are married to a Vietnamese, the down payment can be reduced to 20%, having the loan over 15 years.

What is the biggest bank in Vietnam?

The biggest bank in Vietnam is the Bank for Investment and Development of Vietnam (BIDV). The bank has approximately USD 44 billion dollars worth of assets. By comparison, Bank of America has around USD 2.38 trillion of assets.

How is the mortgage market in Vietnam?

More than 90% of Vietnamese families own their homes and the vast majority do not have a mortgage. As such, the mortgage market is still comparably untapped and has a lot of potentials.

How does it work with property ownership in Vietnam?

If you’re allowed to enter Vietnam, you can buy both condominium units and landed properties as a foreign individual. Yet, there are some restrictions in terms of foreign ownership quotas.

For example, foreigners can only own 30% of the units in any given condominium project. If you open a real estate trading company, joint venture, or get married to a local Vietnamese, the ownership regulations change to your advantage.

How can I learn more about Homebase?

To learn more about the company, you can visit: https://homebase.com.vn/

To learn more about the co-investment product, you can visit: https://homebase.com.vn/services/CoInvestment