Enhanced Verification System from Applications on the 14th
Additional Housing Acquisition Verification Period 3 Years → 1 Year
2-House Ownership Disposal Deadline 1 Year → 6 Months
The number of autonomous districts in Seoul where the average apartment sale price exceeds 50 million KRW per 3.3㎡ has more than doubled in one year. As of November last year, only Gangnam-gu, Seocho-gu, and Songpa-gu among the 25 autonomous districts in Seoul had average apartment sale prices exceeding 50 million KRW per 3.3㎡, but last month Yongsan-gu, Seongdong-gu, Mapo-gu, and Gwangjin-gu were added, making a total of seven districts. The photo shows the view of Seoul apartments from 63 Square. Photo by Hyunmin Kim kimhyun81@
[Asia Economy Reporter Jin-ho Kim] It has become virtually impossible to exploit the policy financial product 'Bogeumjari Loan,' popular as a means for ordinary people to purchase their own homes, for gap investment. This is due to the significant strengthening of the verification period for additional home acquisitions and the deadline for disposal when owning two homes. However, concerns have been raised that the effectiveness will be minimal since there is no retroactive application.
According to the financial sector on the 16th, the Korea Housing Finance Corporation has drastically shortened the verification period for additional home acquisitions from the current 3 years to 1 year (on each anniversary after execution) starting from applications for Bogeumjari Loans submitted on the 14th. Additionally, the grace period for selling the house if additional acquisitions are confirmed during the verification stage has been shortened from the current 1 year to 6 months.
This is analyzed as a measure to institutionally supplement the system to prevent Bogeumjari Loans from being abused as a means of 'gap investment' (purchasing a house with a small amount of money while holding a jeonse lease).
The system has been significantly strengthened in line with the policy intent of Bogeumjari Loans, which target ordinary citizens and genuine buyers. Although there was a post-verification system before, additional home acquisitions were checked 3 years after execution, and a 1-year grace period was given, effectively allowing gap investment for 4 years. In fact, cases of gap investment using Bogeumjari Loans can be frequently found in financial and real estate communities.
Accordingly, verification and penalties for borrowers applying for Bogeumjari Loans from the 14th onward will be significantly strengthened.
If the property is not disposed of within the deadline, not only will the borrower lose the benefit of the existing deadline (demand for repayment), but if they do not comply, they will be registered as delinquent and subjected to auction (forced execution) procedures. There is also an option to repay the Bogeumjari Loan instead of selling the house. However, considering the characteristics of Bogeumjari Loans, which cannot be refinanced with general commercial bank mortgage loans, this is also expected to effectively force disposal.
However, since the strengthened measures do not apply retroactively to existing Bogeumjari Loan borrowers, there are many voices questioning their effectiveness. There are also calls for strengthened follow-up measures against those who have exploited the system in recent years by purchasing low-priced homes for gap investment. Critics argue that the system's supplementation came too late, and most of those who exploited the system have already made money and exited. A financial sector official said, "Gap investment using Bogeumjari Loans has become somewhat normalized in financial communities over the past few years," adding, "While institutional improvements to prevent gap investment are desirable, it seems like a remedy that came too late."
Meanwhile, Bogeumjari Loans are fixed-rate mortgage loans provided for homes priced at 600 million KRW or less, with an annual income limit of 70 million KRW (85 million KRW for newlyweds). The maximum term is up to 40 years, and the maximum loan amount is about 360 million KRW.
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