[7.10 Real Estate Measures] 'Previous LTV Regulation' Applied to Final Payment Loans in New Regulatory Areas

Relaxation of Income Criteria for Additional 10% LTV Points for Ordinary Citizens and Actual Buyers

[Image source=Yonhap News]

[Asia Economy Reporter Kangwook Cho] Apartment buyers in areas newly designated as regulated zones under the June 17 measures will be able to apply the existing Loan-to-Value (LTV) ratio for their mortgage loans.

On the 10th, the government announced supplementary measures to stabilize the housing market, including transitional measures for balance payment loan regulations.

According to the supplementary measures, for projects where the recruitment of residents was announced before the designation or change of regulated areas, the existing loan regulations will apply to balance payment loans for non-homeowners and one-homeowners with disposal conditions.

This means that if an apartment was purchased before the June 17 announcement but the area was later included in a regulated zone or the regulatory threshold was raised, resulting in a lower LTV for balance payment loans, the previous LTV will be applied as relief.

As a result, apartment buyers in Incheon’s Geomdan and Songdo, which were non-regulated areas but have now been designated as speculative overheated districts under the new measures, experienced confusion due to reduced balance loan limits. However, with the supplementary measures, they will be able to apply the previous LTV of 70%. However, multi-homeowners can only take balance payment loans within the scope of loans obtained before the designation or change of the regulated area.

Additionally, income criteria for the "low-income and genuine demanders" category, which offers a 10 percentage point preferential treatment on LTV and Debt-to-Income (DTI) ratios in regulated areas, will be relaxed.

Accordingly, the current income criteria in adjusted target areas and speculative or speculative overheated districts, which were a combined annual income of 60 million KRW or less for couples (70 million KRW or less for first-time buyers) and 70 million KRW or less for couples (80 million KRW or less for first-time buyers), have all been raised to a combined annual income of 80 million KRW or less for couples (90 million KRW or less for first-time buyers).

The supplementary measures for balance payment loans and the relaxation of income criteria will take effect from the 13th.