VietNamNet Bridge – Citizens who earn VND6-7 million per month should take out preferential loans to buy a home, but those with a lower income should rent, said Deputy Minister of Construction Nguyen Tran Nam.

Speaking at a web conference on the VND30 trillion home loan package on Tuesday, Nam said those earning around VND6 million a month should access projects with micro apartments of some 30 square meters each, like Viglacera Dang Xa in Hanoi. A home of this size is enough for a couple and their child, he said.

With a price of about VND8.5 million per square meter, homebuyers will have to pay a total of VND250 million, including a VND50 million down payment and installments over a 15-year period. The highest monthly payment is only VND3 million, allowing homebuyers to repay bank loans, he said.

In response to the question ‘If a worker with a monthly income of VND4-5 million can borrow VND400 million to purchase a home?’, Tran Xuan Hoang, deputy general director of BIDV, said his bank could not give a loan to such a client. He explained that people with such a low income would never be able to repay loans even though the loan period is up to 15 years.

Nam suggested very low-income families should rent homes and save. In any country, even a developed one, very low-income people do the same thing, he stated.

“I have just met a delegation of the Korea Development Institute. They recommended us to have diverse property packages,” he said.

“Given the current prices of land and materials, we cannot ask for apartments priced at VND80-90 million each. We all know there’s no way because the Government has provided full support in terms of land, tax and credit.

“The State is trying to find accommodation for people, not to help them own a home. This must be done over decades, not a few years.”

He said low-cost housing projects in Hanoi getting loans from the VND30-trillion credit program would offer a price of less than VND12 million per square meter.

For example, the project of Housing and Urban Development Corporation (HUD) in Southwest Linh Dam, though located in a model urban area with good infrastructure, quotes a price of below VND12 million psm.

The project of Viglacera in Dang Xa sets a price of VND8.5 million psm. Budget condo projects in Hung Yen, Thai Binh, Phu Tho and Bac Ninh are all priced under VND7 million psm.

“In my opinion, with the current costs of land, materials and site clearance compensation, the above prices reflect a really great effort of the State management bodies and project owners,” said Nam

Still, he said quality control should be tightened. “I’d like to emphasize that (low-cost homes) have to meet the same quality standards as commercial homes. They only differ in furnishings, but technical and safety requirements are the same,” he said.

Hoang said BIDV so far had not granted any loan application.

Most individuals came to BIDV to learn the procedures. As for corporate clients, the bank is considering giving them loans under the commercial housing package in accordance with Circular 07.

BIDV will sign loan contracts with a number of project owners. For example, on June 17 and 18, the lender will sign deals with project owners in Binh Duong Province.

Nguyen Viet Manh, director of the Credit Department under the central bank, said banks should make careful appraisal before granting loans to avoid causing bad debt.

The preferential home loan package cannot address the needs of all beneficiaries, but only those capable of repaying both principal and interest can take out loans.

Therefore, when making lending conditions, banks should determine debt recovery as the top priority to avoid bad debt later, he said.

Source: SGT