How much is the monthly payment for a 20-year 1 billion mortgage?

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.

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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