Future Home Mortgage Officially Allowed

This is the attention-grabbing content of Joint Circular 01/2014 on instructions for the mortgage of future houses as specified in Decree 71/2010 dated June 23, 2010 of the Government on specific regulations and instructions for the enforcement of the Housing Law. The joint circular was issued by the State Bank of Vietnam, the Ministry of Construction, the Ministry of Justice, and the Ministry of Natural Resources and Environment.

 

According to this new ruling, future commercial and social houses (apartments, villas and townhouses) can be used as mortgages for borrowing money.

 

The joint circular also specifies that the mortgagor is only allowed to put their future houses as mortgages at one credit institution to borrow money to buy houses.

 

Regarding collateralisation conditions, the collateral shall be made only when it meets collateralisation conditions. Specifically, the house to be mortgage must have the technical design approved, have the foundation built, and have the sale and purchase contract signed with the housing project owner. In addition, houses handed over to the buyer but yet certified by state agencies are also eligible for mortgage.

 

Besides, houses are eligible for mortgage if they belong to projects granted certificates or land handover decisions.

 

Also according to this regulation, the value of future houses used as mortgages are agreed by both parties based on the value of house on the date of signing purchase and sale contracts. Mortgage contracts must be notarised by public notaries and entered into security transactions as prescribed.

 

This circular is not applied to the collateralisation of future houses built on their own land.

 

This circular takes effect on June 16, 2014 and replaces the Joint Circular No. 05/2007 dated May 21, 2007 of the Ministry of Justice, the Ministry of Construction, the Ministry of Natural Resources and Environment and the State Bank of Vietnam on housing mortgage registration.