Apartment or independent house for three-generation family?

Question from reader Van Truong:

My family of six lives in an apartment of over 60 square meters in Hoang Mai District, Hanoi, which feels cramped and inconvenient. Recently, with the significant drop in bank interest rates, my husband wants to sell this small apartment to upgrade to a larger house, and we have already received an offer of VND3 billion (US$123,052).

Our combined monthly income is about VND60-70 million. After deducting living expenses, education costs for our two children, and care for our elderly parents, we can save about VND15-20 million each month. We have a savings account with VND1.3 billion that is earning a very low interest rate on deposits.

Many people advise us to borrow an additional VND1-1.5 billion from the bank at an interest rate of about 6-7% per year to switch to a larger apartment in Cau Giay District, which is convenient for our work and our children’s study.

I am seeking advice from experts and experienced readers on whether we should take out a bank loan to change houses. With a budget of VND5.5-6 billion, should I buy a larger apartment of about 100 square meters or a house in an alley of only 30-40 square meters?

Advice from Nguyen Quoc Anh, deputy CEO of real estate trading platform Batdongsan:

Your budget is nearly VND6 billion, including VND3 billion from the sale of your current apartment, VND1.3 billion in savings, and a loan of VND1.5 billion.

To buy a spacious three-bedroom apartment suitable for a three-generation family in Cau Giay District, you should look at projects that have been completed and handed over several years ago as there have been relatively few new projects launched in the district in recent years, and their prices are quite high.

According to data from the Batdongsan platform, as of the end of 2023, the listed prices for mid-range and high-end apartments in Cau Giay are VND42 million and VND57 million per square meter, respectively, representing an increase of 43-45% over the past five years.

You can refer to some of the most popular and sought-after projects on Batdongsan platform that have been completed and handed over, as follows:

Regarding independent houses in alleys, our data shows that the average listed price for houses in Cau Giay in Q4 of 2023 is about VND198 million per square meter, an increase of 71% over five years.

Therefore, a 30-to-40-square-meter house would have a reference price ranging from VND5.9 billion to VND7.9 billion depending on location, quality, and furnishings. This price range slightly exceeds your budget.

You might consider houses in neighboring districts like Bac Tu Liem or Nam Tu Liem for more affordable options:

Regarding the current bank interest rates, our compiled data indicates that the per-year deposit and lending rates of commercial banks have decreased by over 2% compared to the end of 2022.

Specifically, the preferential interest rates for commercial housing loans in January 2024 from various banks are between 3-10.9% per year.

Once the preferential period is over, the floating interest rates range from approximately 9.5% to 13% per year. For state-owned banks like Agribank, Vietcombank, Vietinbank, and BIDV, the applied interest rates in the first year for home loans are between 6.5-8.5% per year.

If you opt for a bank loan of VND1-1.5 billion to purchase a house at this time, assuming an interest rate of 8% for the first year followed by a floating rate of 12%, your family would have to pay a monthly interest of VND7-15 million.

If you allocate about VND15-20 million each month for repaying the principal and interest, it will take approximately five to ten years to settle the loan.

However, considering that your family includes young children and elderly parents, I advise against using all your savings and taking out a loan for a house.

You should reserve at least VND5 million per month for risk management and unforeseen emergencies.

Regarding the choice between an apartment and a house in an alley, I believe each type has distinct advantages and disadvantages.

For multi-generational families, an apartment offers the benefit of all members living in the same unit, which strengthens bonding and makes it convenient to care for children and elderly parents.

Your family can also enjoy existing amenities, services, good security, and a spacious, airy environment for children to play in.

The downside is that living in the same unit can sometimes feel cramped, potentially leading to conflicts or disputes within the building, and it can be inconvenient during major events.

For older apartment projects, the price growth rate slows down and it is harder to maintain its value like with houses or land.

Meanwhile, houses offer the advantage of a larger usable area compared to apartments.

For example, a 40-square-meter house with four floors has a usable area of 160 square meters, whereas an apartment might only offer 100 square meters.

You can have more control over renovations and redesigning a house, and you do not need to pay service or maintenance fees as in apartment buildings.

Houses also provide a more private living space since each generation can live on a different floor.

However, houses located in alleys might be less convenient due to their distance from amenities, difficulties for car drivers, and potentially a more complicated surrounding environment.

Therefore, you should consider your family's needs and preferences when deciding on the most suitable and comfortable living space for all members.

*The question and answer were translated into English by AI.