Loan Recall for Apartments Over 300 Million Won Purchased with Jeonse Loans After the 10th
Jeonse Loan Regulations in the June 17 Real Estate Measures Effective from the 10th
Jeonse Loan Limit for Single Homeowners Reduced to 200 Million Won... Private Guarantees Up to 300 Million Won
[Asia Economy Reporter Kim Hyo-jin] Starting today (the 10th), if you purchase an apartment worth more than 300 million KRW in real estate regulation areas, you will no longer be able to receive jeonse loans. Additionally, if you buy a new house after receiving a jeonse loan, you must repay the loan immediately. This is part of the government's June 17 real estate measures aimed at curbing so-called 'gap investment,' where buyers use jeonse deposits to purchase homes.
The jeonse loan regulations included in the June 17 real estate measures announced by the Financial Services Commission will take effect from the 10th. The core of this regulation is that jeonse loan guarantees will not be provided for those purchasing apartments exceeding 300 million KRW in regulated areas. If you buy an apartment worth more than 300 million KRW in a speculative or speculative overheating district and then rent another home under a jeonse contract, you will be ineligible for a jeonse loan. Accordingly, if you purchase a regulated apartment after receiving a jeonse loan guarantee from this date onward, the jeonse loan will be recalled. The intent is to prevent the use of jeonse loans for 'gap investment' (buying a house with jeonse deposits).
Exceptions to the jeonse loan restrictions apply when the jeonse home is obtained outside the special or metropolitan city where the purchased apartment is located due to genuine needs such as job relocation, children's education, parental care, medical treatment, or school violence victimization. Another exception is when household members actually reside in both the purchased apartment and the jeonse home.
If the purchased apartment still has an existing lease contract period remaining, loan recall will be deferred during that period. If the maturity of the current jeonse loan arrives first, the loan can only be used until that maturity. This means extending the jeonse loan maturity is not possible.
Also, from today, the maximum guarantee limit for jeonse loans by the Korea Housing & Urban Guarantee Corporation (HUG) for homeowners will be lowered from 400 million KRW to 200 million KRW. For jeonse contracts signed before this date, the previous regulations will apply upon the borrower's submission of proof. Borrowers who own one home and have previously used jeonse loan guarantees will also be subject to the previous regulations when extending loans, but the reduced limit will apply when obtaining new loans such as for moving.
The Financial Services Commission explained, "The jeonse loan regulations in this measure fully apply only when both of the borrower's two active actions?purchasing a regulated apartment and applying for a jeonse loan?occur after June 10."
Therefore, cases where the apartment was priced below 300 million KRW at purchase but later exceeded that due to price increases, cases of inheriting regulated apartments, or cases where the regulated apartment was purchased before the regulation date are not subject to the regulations. Borrowers who were already using jeonse loans before the regulation date and purchased regulated apartments afterward are not subject to loan recall.
Borrowers who apply for jeonse loans after the regulation date and purchase pre-sale or occupancy rights of regulated apartments during the loan period will also not have their loans recalled. Since this regulation targets apartments with high concerns for gap investment, it does not apply when purchasing non-apartment housing such as villas or multi-family houses.
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