How long is the medium term loan? Should a medium-term loan to buy a house?

What is a medium-term loan? What are the pros and cons of this type of loan? Should I get a medium-term loan when buying a house? Please read the following article

How long is the medium-term loan?

Currently, banks have many different loan packages to meet the needs of customers. Depending on each loan product, customers can choose the loan period and loan payment. 

Medium-term loans have loan terms from 1 year to 5 years. This is also clearly stated in Article 10 of Circular 39/2016/TT-NHNN . The circular also specifies the terms of short-term and long-term loans, in which:

• Short-term loans with a maximum loan term of 1 year

• Long-term loans with a loan term of more than 5 years

Thus, for those who are wondering how long a medium-term loan will take, there must be an answer for them. If you take a medium-term loan, you will need to pay 60 months in advance (corresponding to 05 years). In case customers do not pay their debts in time, borrowers will be subject to fines and other penalties from the bank.

What are the characteristics of medium-term loans?

Above, you know how long the medium-term loan is. However, if you want to use this loan package, you should learn more about the characteristics of this loan package of banks.

Medium-term borrowers

Medium-term loans can be used for many different purposes. However, its payment term is also relatively short, only 5 years maximum. Therefore, this loan package is best suited for the following purposes:

• Invest in building factories

• Procurement of industrial equipment, machinery for production

• Procurement of fixed assets

The interest rate of a medium-term loan package

Besides wondering how long the medium-term loan package is, customers are also very interested in the interest rate of this loan package. Currently, medium-term lending interest rates are quite good. Depending on each bank and specific term, the interest rate can range from 6.5 - 11%/year.

However, depending on the actual time, interest rates may fluctuate slightly. Mid-term homebuyers do not have to worry too much because the movement is relatively small, maybe only a little bit in the above range.

If you are intending to take out a home loan and want to calculate the principal and interest to be paid, please immediately refer to Hochiminhrental's home loan interest calculator feature. Just enter the loan information, Hochiminhrental will calculate the total amount you have to pay, even details of the principal, interest, and outstanding balance each month.

Loan packages of banks with attractive interest rates that are most suitable for you will also be suggested by Hochiminhrental. This is a smart and convenient tool for you to calculate and budget before deciding to buy a property.

Medium-term loan method

The current form of loans applied by banks for medium-term loan packages is under investment projects. In addition, individuals can also borrow medium-term loans in the form of a credit to hire-purchase.

With each type of loan as well as commitment, the home loan interest rate will be adjusted. Customers need to consider carefully to get the best choice for their loan case.

Should I get a medium-term loan to buy a house?

Currently, many people, when learning about how long a medium-term loan is, are wondering, should a medium-term loan be used to buy a house? In fact, many customers look to banks with attractive interest rates for medium-term loans to buy houses and cars. 

However, as mentioned above, the payment period of this loan product is only allowed up to 60 months. Therefore, a medium-term home loan is only suitable when you have nearly enough money to buy real estate and can afford to pay in the short term. 

At the same time, you already have financial stability and have clear and positive plans related to paying off your debt periodically while still ensuring your life. Below, Hochiminhrental will clearly analyze the advantages and disadvantages. When taking a medium-term home loan for you to understand more:

Advantages of medium-term loans to buy a house

• The repayment period is not as urgent as the short-term loan. Customers are able to arrange their own finances;

• Flexible bank disbursal. 

Disadvantages of medium-term home loans

• Slow payback period;

• High risk if the market fluctuates or the project is behind schedule.

• Property needs to be mortgaged and the participation of project investors is required to minimize possible risks.

According to financial experts, the choice of a medium-term or long-term loan package will depend on the specific financial capabilities of each customer. If you do not want to be under great financial pressure, you should choose a long-term loan to buy a house. At the same time, try to work to earn money to be able to repay the bank loan early. 

For example, you apply for a 20-year home loan. But you work hard, after only 15 years you can pay off your debt.

Currently, many banks have a policy of waiving or reducing the penalty fee for paying the loan 4-6 years before maturity, so borrowers can pay off without worrying about taking many risks.

Above, Hochiminhrental real estate has answered in detail for you the question of how long a medium-term loan is as well as the characteristics of this loan package. Hopefully, it has helped you to have more information to consider whether to take a medium-term loan to buy a house. Hochiminhrental wishes you soon to own your dream home!

Quynh Thu 

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