Double leverage is a term used to refer to the use of loans for investment rather than the use of equity. This is a tool particularly enjoyed by Vietnamese real estate investors, especially as financial support policies are becoming more and more attractive.
The first reason to use double leverage: Optimize cash flow
Installment loans are a way for many investors to balance their net cash flows. For real estate loans, where many investors create a steady cash flow from leasing, the payment and liquidity risk is transferred to tenants. The ability to optimize the cash flow of real estate loans is the same as the way real estate expert Brandon Turner said in a Forbes post: “Effective use of mortgage loans for rent also It’s like buying a super-value property that does not really pay for it. So, they are super-profitable. “
Second reason to use double leverage to buy a home: Reduce opportunity costs and liquidity risk
Strengthening and “freezing” a large amount of capital into apartments is a personal financial barrier that makes many home buyers afraid. In many ways reducing opportunity costs and optimizing capital mobility, installment loans are the most feasible and feasible option. For individual investors, by splitting the cash flow and carefully lengthening the repayment period from large loans into regular installments, the borrower can minimize the liquidity risk to the lowest possible level enough time to arrange finances. In the long term, investors can turn to other investment alternatives to generate more profit instead of just “capital” confiscated in this particular type of asset.
The third reason to use double leverage to buy a home: Active before market volatility
The real estate market is always a strong market, where the ability to spin capital quickly to catch the market is a prerequisite for success. Double leverage is always favored by its feasibility and speed. This can be seen in the Vietnamese market. In the season-after-year real estate season, loan installments with simplified loan procedures are the key to boosting the transaction volume. In fact, mortgage loans are allowing homebuyers to “swing” between 60-80% of real estate values quite quickly when the review and disbursement period is only 1-3 days. Not only fast, using double leverage to buy real estate is easy to implement when the subject of the mortgage application is always quite wide by the total loan capital “crisis” from the major commercial banks.
Fourth reason to use double leverage to buy a home: Opportunity to enjoy preferential interest rates
An advantage that can not be ignored when borrowing money to buy houses in Vietnam is the opportunity to enjoy preferential interest rates just equivalent to the deposit, which is very difficult to meet in other interest markets. For example, a preferential interest rate is only 7.3% from Vietcombank or 7% interest rate from BIDV’s recent loan support package. Borrowers can flexibly select the appropriate interest rate.
Specifically, as in the BIDV homebuyer loan package, customers can choose between several loan packages: 7% per annum for the first 6 months, 7.5% per annum for the first 12 months or only from 8.8% per annum applied in the first 24 months since the first disbursement.
The fifth reason to use double leverage to buy a home: Manage personal finances more effectively
Installment loans help to manage personal finances more effectively, one advantage comes from the combination of these four advantages. Buyers are more active in managing cash flow, reducing risks and costs, and lowering interest rates. Not only that, Vietnamese investors also benefit from the financial management tools provided by the creditors.
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