Loan Interest Rate Reduced to 3.75~4.05% with Preferential Rates Applied
Integration of Existing Bogeumjari Loan with General Type Safe Conversion Loan and Qualified Loan
Available Up to 500 Million KRW Within LTV and DTI Limits
[Asia Economy Reporter Sim Nayoung] On the 30th, a special BoGeumJaRi loan, a fixed-rate mortgage loan at 4% during the interest rate hike period, will be launched. The Financial Services Commission and the Korea Housing Finance Corporation will operate this product, which integrates the existing BoGeumJaRi loan with the general-type Safe Conversion Loan and Qualified Loan, on a temporary basis for one year.
Borrowers with housing prices of 900 million KRW or less can use it up to 500 million KRW within the LTV (Loan to Value ratio) and DTI (Debt to Income ratio) limits without income restrictions. DSR (Debt Service Ratio) is not applied.
The interest rate, which is lower than the market mortgage loan rate, will be applied from the end of January, and adjustments will be made if necessary considering market interest rates and available resources of the Korea Housing Finance Corporation. ▲For housing prices of 600 million KRW or less & combined spousal income of 100 million KRW or less: 4.65~4.95% ▲For housing prices exceeding 600 million KRW or income exceeding 100 million KRW: 4.75~5.05%. Preferential interest rates will be discounted up to 0.9 percentage points depending on borrower characteristics.
The target is housing priced at 900 million KRW or less. The order of application is 'KB market price > Korea Real Estate Board market price > official housing price > appraisal value.' Above all, the biggest difference from the BoGeumJaRi loan is the removal of the income limit condition of 70 million KRW per year.
However, to apply preferential interest rates, proof of income for the borrower and spouse is required. The purposes are divided into three: home purchase, repayment of existing loans, and return of rental deposit. Homeless persons can apply for purchase purposes, and one-home owners can apply for repayment or compensation purposes. Temporary two-home owners for replacement acquisition can apply on the condition that the existing home is disposed of within two years.
The loan limit is up to 500 million KRW. It is handled only within a maximum LTV of 70%. For multi-family houses, row houses, and detached houses, an additional 5 percentage points, and for regulated areas, an additional 10 percentage points are deducted. However, if the borrower meets the real demand requirements (housing price 800 million KRW, income 90 million KRW, homeless), the deduction for regulated areas is excluded. First-time homebuyers can apply up to 80% LTV. This is limited to cases where neither the borrower nor the spouse has previously owned a home.
DTI is handled only within a maximum of 60%. In regulated areas, 10 percentage points are deducted, but the deduction is excluded if the real demand requirements are met. DSR is not applied. There are six maturity options: 10, 15, 20, 30, 40, and 50 years. The 40-year maturity applies to those aged 39 or younger or newlyweds married within 7 years. The 50-year maturity applies to those aged 34 or younger or newlyweds.
The basic loan interest rate is divided into preferential type at 4.65~4.95% and general type at 4.75~5.05%, with an additional preferential interest rate applied up to 0.9 percentage points. The basic loan interest rate is adjusted monthly considering market interest rates and funding conditions. A preferential interest rate (0.1 percentage points) for low-income youth (aged 39 or younger & housing price 600 million KRW or less & combined spousal income 60 million KRW or less) has been newly established. When applying the preferential interest rate, the loan interest rate can be reduced to as low as 3.75~4.05%.
The Financial Services Commission stated, "It is necessary to establish a funding plan considering that the loanable amount is the lesser of the LTV applied amount and the loan limit." For example, for a 500 million KRW apartment, an LTV of 70% applies, so a loan of up to 350 million KRW is possible. For an 800 million KRW apartment, a loan of up to 500 million KRW is possible.
Also, "Since the one-home ownership condition is strictly applied during the loan period, if you plan to own two or more homes by purchasing additional homes, caution is needed when using the special BoGeumJaRi loan." The acquisition of additional homes will be checked annually, and if the additional home is not disposed of within six months, the loan will lose its term benefits and use of the BoGeumJaRi loan will be restricted for three years.
Switching from other products or switching in the future will be exempt from early repayment fees. Early repayment fees are waived not only when switching existing mortgage loans to the special BoGeumJaRi loan but also when repaying the special BoGeumJaRi loan early in the future.
The supply target for the special BoGeumJaRi loan for one year is 39.6 trillion KRW.
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