Shinhan Bank Lowers Mortgage Lien Setting Ratio to 110%

Effective from applications on the 14th... "Financial cost burden decreases"

[Asia Economy Reporter Kwangho Lee] Shinhan Bank is lowering the mortgage loan lien registration ratio.

According to the financial sector on the 9th, Shinhan Bank will reduce the lien registration ratio from the existing 120% to 110% starting from mortgage loan applications on the 14th.

The lien registration ratio refers to the ratio at which a financial institution registers a lien on the collateral for the loan provided. A lien is the right to receive repayment with priority over other creditors.

With the lien registration ratio lowered to 110%, the financial cost burden such as the purchase cost of National Housing Bonds for loan customers is expected to decrease.

For example, for a 300 million KRW mortgage loan, previously a lien of 360 million KRW was set, but going forward it will be set at 330 million KRW. From the borrower's perspective, the purchase cost of National Housing Bonds, which corresponds to 1% of the lien amount, decreases from 3.6 million KRW to 3.3 million KRW.

Most importantly, as the lien registration ratio decreases, the limit on the collateral increases, allowing for a higher loan limit when obtaining additional loans from other financial institutions.

A Shinhan Bank official said, "As the mortgage loan-to-value ratio (LTV) limit has been reduced to 40% due to strengthened real estate regulations, reducing the possibility of default, we decided to lower the ratio to reduce the financial cost burden on loan customers."

Meanwhile, KB Kookmin Bank and Woori Bank currently apply a lien registration ratio of 110%, and Hana Bank applies 110% in the case of installment repayment methods.