Conditions for bank loan 1 billion in 20 years
To borrow 1 billion from the bank for 20 years, customers need to ensure the following conditions:
- Customers are Vietnamese citizens, working age from 18 - 75 years old.
- Living and working near lending bank branches
- Have a stable monthly income to ensure debt repayment ability
- Have clear and legal loan purposes
- Legal collateral, owned by the customer or a third party. This collateral can be real estate, cars, savings books,...
- Customers have good credit history, no bad debt at any bank or lending institution at the time of borrowing.
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How much is the monthly payment for a 20-year 1 billion mortgage?
Currently, banks often use the method of calculating interest rates applied on decreasing balances.
Then:
Total monthly payment = Monthly interest payment + Total monthly principal payment.
In there:
Monthly Principal = Initial Loan Amount ÷ Number of Loan Months
First month interest = Initial loan amount x Monthly interest rate
2nd month interest = (Initial loan amount - Principal paid) x Monthly interest rate
Similarly, from the 3rd month onwards, interest will be calculated on the remaining balance.
Suppose a customer takes out a mortgage loan of 1 billion for 20 years (equivalent to 240 months) with an interest rate of 10%/year, then the monthly payment amount is as follows:
Monthly principal = 1,000,000,000 ÷ 240 months = 4,166,667 VND
First month's interest = 1,000,000,000 x (10% ÷ 12 months) = VND
2nd month interest = (1,000,000,000 - 4,166,667) x (10% ÷ 12 months) = 8,265,416 VND
3rd month interest = (995,833,333 - 4,166,667) x (10% ÷ 12 months) = 8,230,833 VND
Similar calculation from month 4 to month 240.
Thus, the monthly principal and interest payments for a loan of 1 billion VND will decrease each month.
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