• 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 investment help to drive up the property prices, rental yields range up to 8%.

    Investors sometimes ask me whether it’s possible to receive local financing to buy property in Vietnam. I decided to do more deep research on the topic and to write this article, where I explain how to finance your property in Vietnam as a foreigner.

    Can foreigners get 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, unless you fulfil 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 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.

    saigon

    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 two options:

    • Pay the property in cash (which is a common practice)
    • 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

    The second option is not as common and will require more work and time if you’ll even be capable to find 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 number of local banks, who might be able to cater you. For example:

    • Techcombank
    • Vietcombank

    UOB Loan Conditions (Interest Rates, Tenures, and Other Basic Requirements)

    I’ve been in contact with a UOB, a major Singapore bank that shared 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 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 does regulations and conditions in the mortgage industry.

    Foreigners’ Problems to Receive Property Title Insurances

    An outspoken problem Viet Keus and foreigners have is the problem to receive title insurances in Vietnam. As local mortgages are rarely offered to foreigners, and sometimes Viet Keus 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, it’s important that you contact a legal firm who has a long experience in catering foreigners that wish to 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 cost around USD USD 5000 – 10,000. The first step paying 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.

    Conclusion

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

    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. Hopefully, the mortgage market will develop over the years.

    Property is still relatively cheap in Vietnam and the down payment you would pay when buying a property in Hong Kong is often equally big as the complete purchase in Vietnam.

    Interest rates are fairly high and the rate provided from UOB is currently 8%. Hence, a margin loan might be a better option.

    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.

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  • 2 Responses to “How to Get a Property Loan in Vietnam: Foreign Buyer’s Guide

    1. Jun Yuan at 10:58 am

      Hi Marcus,

      I’m JY, Co-founder and CEO of Homebase.

      I read your article “How to Get a Property Loan in Vietnam: Foreign Buyer’s Guide” and note that you mentioned that it’s very hard for foreigners to get a mortgage to own a home.

      One of the pain point that our startup is trying to solve is home-financing for expats / foreigners in Vietnam, We solve this by creating a rent-to-own model that allows expats / foreigners to essentially get a “synthetic-mortgage”.

      I would love to either 1) contribute a guest post article on rent-to-own models in SEA or Vietnam; and/or 2) perhaps you might want to share that insight with your readers.

      I’m happy to follow up this email with a short call, or send you more information if you’re interested.

      Thanks in advance, Marcus!

      Sincerely,
      JunYuan Tan
      CEO, Homebase

      1. Marcus Sohlberg at 9:35 am

        Hi JunYuan, thanks for sharing! I will send you a separate email.

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