Reading a Vietnamese bank offer sheet, line by line
A home loan offer in Vietnam usually arrives as a notice of credit approval of two or three pages, with the substance in appendices behind it. The headline rate is on page one. Almost nothing else that determines what you will pay is.
The eight numbers to extract
Everything below exists to help you find these. Once you have them you can price the offer, compare it with another, and stop relying on anyone’s summary.
| # | Number | Usually found in |
|---|---|---|
| 1 | Amount approved | Page one |
| 2 | Term in months | Page one |
| 3 | Promotional rate, % a year | Page one, in large type |
| 4 | Length of the promotional period, in months | Page one, in small type or a footnote |
| 5 | Base rate today, and its exact definition | Interest clause, or a rate appendix |
| 6 | Margin, in percentage points | Interest clause |
| 7 | Everything payable at or before drawdown | Fee schedule, plus the insurance paperwork |
| 8 | Early repayment tiers and the clawback window | Fee schedule, near the end |
Page one: the offer summary
Read the footnotes before the headline. The rate in large type is almost always qualified by a condition, and the condition is the part that costs money. Common ones:
- Conditional on insurance. “Rate applicable to customers participating in the insurance programme.” Worth 1.25 points of effective rate on a typical loan, as set out in loan insurance.
- Conditional on salary transfer. Usually harmless, sometimes not, if it means changing employer arrangements you do not control.
- Conditional on drawdown by a date. Miss the date and the promotional rate reverts, occasionally without a new approval being needed.
- Available for a limited disbursement window. On an off-plan purchase this can mean the promotion has largely expired before the balance is large.
Also check what the approved amount is a percentage of. If the bank has valued the property below the price you agreed, the loan to value looks fine on their paperwork and your deposit requirement has just gone up.
The interest clause
This is the most important paragraph in the document and it is typically four or five lines long. You are looking for three things.
- The formula. It should read as a base plus a margin, with both named and the margin stated as a number. A margin “as determined by the Bank from time to time” is not a margin, it is an absence of one.
- The base rate’s definition. Which published rate, of which tenor, observable where. The three common shapes and what each means for you are in base rate plus margin.
- The reset schedule. Every three, six or twelve months, and what notice you receive. Look for a cap on the change at any single reset; if one exists it will be here, and usually it does not exist.
Also establish whether interest is charged on the reducing balance or on the original principal. If the phrase “on the original loan amount” appears anywhere near the interest calculation, the quoted rate is not comparable to any other rate you have been quoted. The size of that difference is worked through in equal principal or equal instalments.
The fee schedule
Usually the last appendix, frequently a separate document, and the one most likely to be handed over late. Fees fall into three groups by when they bite.
At drawdown
| Item | Typical scale |
|---|---|
| Valuation fee | 1,500,000 to 5,000,000 dong, sometimes a percentage on large properties |
| Arrangement or appraisal fee | Nil to 0.5% of the facility |
| Notarisation of the mortgage | Scale fee on the secured value |
| Registration of the security interest | Modest, but a real line |
| Property insurance, first year | Small, and a genuine condition of most loans |
| Credit life insurance, single premium | Frequently 5 to 6% of the amount borrowed |
Add them up and treat the total as a reduction in the money you actually receive. On the example loan used on this site, 15,000,000 dong of ordinary fees moves the effective rate by about 0.12 of a point; a 6% insurance premium moves it by 1.25 points. Scale tells you which lines to argue about.
During the loan
Late payment interest, usually 150% of the contract rate on the overdue amount, and a separate penalty on overdue principal. Statement or early-settlement quotation fees. Annual property insurance renewals. None are large; all should be known.
On exit
The early repayment tiers, the definition of what counts as early repayment, and the clawback of discounted interest. These three lines decide whether you can ever leave, and they are covered in the early repayment fee and the clawback clause.
The disbursement conditions
Easy to skim and occasionally decisive. What must be true before money moves: notarised mortgage registered, insurance in force, developer confirmations, a minimum own-equity contribution already paid. On an off-plan purchase, check whether disbursement is in tranches tied to construction milestones, because that changes when the promotional clock starts and how much balance it applies to.
Two documents to ask for that are not usually offered
- The full amortisation schedule as a spreadsheet, for the whole term, assuming the current floating rate after the promotion. Any bank can produce this. It resolves every ambiguity about the repayment method in one file.
- The floating rate currently charged on the same product to borrowers whose promotion ended last month. It is the best available evidence of what you will actually pay, and it is a number the branch knows.
Then price it
With the eight numbers in hand, put them into the loan inspector and read two outputs: the effective rate, which tells you whether this offer is cheaper than the other one, and the required payment in the month after the promotion ends, which tells you whether you can live with it. Everything else in the document is detail around those two questions.
The conversation to have with the loan officer once you have read all of this is in fourteen questions before you sign.