From March, Increased Interest Burden Leads to Eligibility for 'Mortgage Principal Repayment Deferral' Even if Unable to Repay

[Image source=Yonhap News]

On the 28th, banks announced that they will expand the eligibility for principal repayment deferral on mortgage loans to assist borrowers facing difficulties in repaying the principal.

First, the criteria for borrowers eligible for mortgage principal repayment deferral support will be expanded to include not only the current conditions such as 'unemployment, business closure, suspension, illness,' but also cases where 'interest burden has increased, causing difficulties in repaying principal and interest.' The standard for determining 'interest burden' will apply a DTI (Debt-to-Income ratio, the proportion of loan principal and interest payments to an individual's annual income) of 70% or higher.

In other words, among mortgage loan borrowers, those who own a house valued under 900 million KRW and have a DTI of 70% or higher can receive a principal repayment deferral with a grace period (interest-only payments) of up to three years.

The housing price criterion for mortgage principal repayment deferral will also be significantly raised from the current '600 million KRW or less' to '900 million KRW or less.' This improvement will take effect from March 2.