Pink book mortgage loan: 8 important information to know

1. What is a pink book mortgage loan?

1. What is a pink book mortgage loan?

Pink book mortgage loan is a form of loan with collateral at a bank. Customers use pink books (Certificate of land use rights, ownership of houses and other assets attached to land) as collateral for loans. The bank will rely on the value of the collateral, the customer's loan needs and other factors to set an appropriate loan limit and term. 

2. Benefits when borrowing a pink book mortgage

Pink book mortgage loan is a form of loan with collateral, bringing many benefits to the borrower. Specifically: 

• Access preferential interest rate loans: Pink book mortgage interest rates are often lower than unsecured loans or other types of loans. Because there is real estate as collateral, banks will assess lower risks and be willing to provide more preferential interest rates to attract customers.
• Large loan limit: Normally, banks can lend up to 70 - 85% of the appraised value of the property. This helps you access large capital sources to meet needs such as buying a house, repairing a house, doing business...
• Long loan term: The pink book mortgage loan period usually lasts from 5-20 years, depending on the policy of each bank. With a long loan term, you can divide the debt into monthly installments, helping to reduce your financial burden.

3. Conditions and procedures for pink book mortgage loans

The following are the conditions and procedures that you need to prepare when borrowing a pink book mortgage at a bank: 

Condition: 

To be approved for a pink book mortgage loan, you need to meet some of the following basic conditions:

• Possessing a valid pink book: You must be the legal owner of the house or land you want to mortgage. The pink book must be issued by a competent state agency and not have any legal disputes.
• Clear loan purpose: You need to clearly state the purpose of using the loan, such as buying a house, repairing a house, investing in a business,...
• Financial ability: The bank will evaluate your financial capacity to ensure you can repay the loan on time. This includes having a stable job, a regular income, and a good credit history.
• Year old: Normally, the borrower must be 18 years old or older and no more than a certain age (usually 65-70 years old) at the end of the loan contract.

Procedure

• Loan application form: This is an application form provided by the bank. You need to fill in all personal information and loan information.
• Personal documents: Identity card/citizen identification card, household registration.
• Documents proving financial capacity: Payroll, bank account statement, labor contract, business registration certificate (if any)...
• Documents related to collateral: Pink book, construction permit (if any), house design drawings, documents proving land ownership...
• Capital use plan: You need to clearly state the purpose of using the loan and the method of repayment.

4. What is the pink book mortgage loan limit?

The pink book mortgage loan limit is the maximum amount the bank agrees to lend you, based on the value of the house you are mortgaging. Typically, this limit ranges from 70% to 85% appraised value of the property. 

For example: If your house is appraised by the bank to be worth 1 billion VND, the maximum loan limit you can receive will be about 700 million to 850 million VND.

Factors affecting loan limits

• Guaranteed asset value: The higher the value of the house or land you mortgage, the larger the loan limit.
• Bank policy: Each bank has different lending policies, so the maximum loan limit may also be different.
• Financial capacity of the borrower: If you have a stable income, good credit history, and high debt repayment ability, the bank may be more flexible in approving loan limits.
• Real estate market situation: Depending on the real estate market situation at that time, the bank can adjust the loan limit accordingly.
• Loan purpose: The purpose of using the loan also affects the loan limit. For example, if you borrow to buy a house, the loan limit may be higher than if you borrow for a business.

5. How long is the pink book mortgage loan term?

Term of pink book mortgage loan is not fixed but varies depending on each bank and loan product package. However, in general, loan terms usually range from 5 to 20 years, taccording to the regulations of each bank. 

Factors affecting loan term:

• Bank policy: Each bank has its regulations on maximum and minimum loan terms.
• Value of mortgaged property: For assets of high value, the loan term can be extended.
• Financial capacity of the borrower: People with stable income and good credit history are often given priority by banks for long-term loans.
• Loan purpose: The purpose of using the loan also affects the loan term. For example, if you borrow to buy a house, the loan term may be longer than if you borrow for a business.

Benefits of choosing the appropriate loan term:

• Reduce monthly debt repayment pressure: With a long loan term, you can divide the debt into monthly installments, helping to reduce your financial burden.
• Financial flexibility: You can adjust your repayment plan depending on your financial situation.
• Optimize benefits: You can choose the appropriate loan term to optimize your benefits, for example, choose a short loan term to reduce the total amount of interest paid or increase the loan term to a long one to reduce financial pressure and increase investment capacity.

6. Interest rate and method of calculating interest on pink book mortgage loans

Pink book mortgage interest rates are one of the important factors that borrowers need to pay attention to. This interest rate is not fixed but frequently fluctuates depending on many different factors, including:

• Policy of the State Bank: The State Bank's basic interest rate regulations will directly affect the lending interest rates of commercial banks.
• Policy of each bank: Each bank has its own interest rate policy, which may be preferential for certain customers or specific loan products.
• General economic situation: Loan interest rates are also influenced by the general economic situation, inflation and capital supply and demand in the market.
• Customer profile: The customer's financial capacity, credit history, loan purpose and value of collateral also affect the interest rate applied.

Calculation method:

The most popular method of calculating pink book mortgage interest today is the method of calculating interest based on the decreasing balance. This is a calculation where interest is calculated on the remaining debt balance after each payment period. Each month, the principal amount payable will gradually decrease, so the amount of interest paid each month will also decrease.

How to calculate interest rate 

Monthly payment amount = Principal divided equally by month + Interest calculated on the remaining loan balance

In there:

• First period interest = Loan amount x Interest period interest rate / 12
• Interest in the following periods = Outstanding debt x Interest period interest rate / 12

For example:

You borrow 500 million VND with an interest rate of 8%/year, a loan term of 60 months, and monthly installments. Then the interest amount and total monthly payment are as follows: 

• First period interest: 500,000,000 x 8% / 12 = 3,333,333 VND
• Amount payable in the first period: 500,000,000 /60 + 3,333,333 = 11,666,666 VND
• Outstanding debt after period 1: 500,000,000 - 8,333,333 = 491,666,667 VND
• Interest period 2: 491,666,6667 x 8% / 12 = 3,244,778 VND
• ...

Thus, the amount of interest payable in subsequent periods will gradually decrease because the remaining debt balance becomes less and less.

7. Which bank's pink book mortgage loan has preferential interest rates?

When deciding on a pink book mortgage loan, one of the most important factors that customers care about is: interest rate. A reputable bank with preferential interest rates will help you reduce your financial burden during the debt repayment process.

SeABank is an option worth considering. SeABank is one of the largest and reputable joint stock commercial banks in the Vietnamese market, providing many pink book mortgage loan packages with attractive interest rates and simple procedures.

Advantages of taking a pink book mortgage loan at SeABank:

• Competitive interest rates: SeABank regularly offers promotional programs with attractive preferential interest rates.
• High loan limit: Maximum loan limit is up to 85 - 90% of mortgage value helps you access large sums of money to meet your needs.
• Long loan term: SeABank offers loan packages with terms of up to 20 years, helping you split your debt and reduce the pressure of monthly installment payments.
• Simple procedure: The loan process at SeABank is simplified, helping you save time.
• Product diversity: SeABank offers many different mortgage products for you to choose from, suitable for each specific need.

8. Note when taking out a pink book mortgage loan

To borrow pink books quickly and effectively, you need to clearly understand the following notes: 

• The pink book mortgage loan contract needs to be notarized: According to the provisions of Point a, Clause 3, Article 27 of the Land Law 2024, loan contracts mortgaged with land use rights need to be notarized. This will ensure legality and protect the interests of both customers and banks.
• Find out clearly about fees and penalties when borrowing: In addition to interest rates, you need to carefully learn about accompanying fees such as:
• Appraisal fee: Fee for the bank to appraise the value of your mortgaged property.
• Insurance fee: Mortgage insurance premium.
• Early repayment fee: If you want to pay off your debt before the deadline, you may have to pay a certain penalty fee.
• Choose the appropriate loan limit and loan term: This helps the borrower ensure solvency without causing financial pressure. 
• Balance finances to repay loans on time: Before deciding to borrow, you need to carefully balance your income and expenses to ensure you have enough ability to repay the loan monthly. Besides, you should also reserve some money to cope with possible risks such as job loss or illness.

Above are SeABank's shares about form pink book mortgage loan, hope to have brought you a lot of useful information. This is a safe form of loan with preferential interest rates, long loan terms and high limits, helping you access large capital sources to expand your business and buy a house.,...For more detailed information about pink book mortgage loans, you can contact SeABank via Hotline 1900 555 587 or visit the website www.SeABank.com.vn.