"When Refinancing Housing Purchase Mortgage or Living Expenses Loan, Additional Housing Purchase Not Allowed"

Analysis of Financial Supervisory Service Complaint Cases by Region
Guidelines for Using Bank Loans

# Mr. Byeonmo refinanced the Bogeumjari Loan he used to purchase a house into a housing mortgage loan for living stabilization funds purpose from Bank A at a lower interest rate, but recently received a notice from the bank stating that he violated the agreement prohibiting additional home purchases.

The complainant argued that he was unaware that the loan was for living stabilization funds purpose and that it was unfair for the bank to demand repayment of the loan on the grounds of additional home purchases. However, during the investigation, it was confirmed that the borrower acquired a house in violation of the loan agreement, which was signed on the condition that no new homes would be purchased during the loan period.

On the 22nd, the Financial Supervisory Service (FSS) introduced this complaint case and announced that when refinancing a housing mortgage loan for home purchase purposes into one for living stabilization funds purposes, attention must be paid to additional agreement terms such as the prohibition of additional home purchases.

A housing mortgage loan for home purchase purposes refers to a loan secured by the house within three months from the date of ownership transfer registration, while a housing mortgage loan for living stabilization funds purposes refers to a housing mortgage loan other than for home purchase purposes. Even if refinancing a housing mortgage loan for home purchase purposes, if more than three months have passed since the ownership transfer registration date, it is refinanced as a housing mortgage loan for living stabilization funds purposes, and if the refinancing loan handling date is after September 14, 2018, an agreement prohibiting additional home purchases is also signed.

The FSS explained, "If additional homes are purchased after signing the agreement, regardless of the actual use of the housing mortgage loan for living stabilization funds purposes, it is considered a breach of the agreement, resulting in loss of term benefits, restrictions on housing-related loans for the next three years, and disadvantages such as providing violation information to credit information concentration agencies."

Furthermore, when changing the conditions of the jeonse deposit return guarantee, it is necessary to carefully check whether the changes are accurately reflected in the contract. The return guarantee means that if the landlord does not return the jeonse deposit to the tenant after the end of the jeonse contract, the guarantee institution guarantees to return the jeonse deposit to the tenant on behalf of the landlord.

For borrowers using the HUG guarantee jeonse loan (Jeonse Deposit Safety Loan), joining the return guarantee is mandatory and can be done before half of the total jeonse contract period has passed. However, after discovering accident history related to the landlord, joining (or changing) may be restricted, so it is advisable to join at the stage of signing or changing the jeonse contract to reduce unnecessary risks.

The FSS emphasized, "When changing the return guarantee conditions such as increasing the guarantee amount, if the borrower submits the necessary documents, the entrusted bank will issue a replacement return guarantee certificate along with the guarantee terms after going through the guarantee review process," and "It is important to carefully check whether the changes are accurately reflected in the guarantee certificate, etc."

Additionally, the FSS pointed out that if a tenant moves out from the residence during the lease contract, the bank may demand repayment of the Butimok Jeonse Fund Loan, which should be noted as a case to be aware of.

In fact, tenant Mr. Jeon requested a change of purpose and extension of maturity to Bank B before the maturity of the Butimok Jeonse Loan, moved out from the residence, temporarily lived at his parents' residence, and paid the deposit to the landlord of the new residence using the jeonse deposit received from the previous landlord.

However, this violated the loan agreement that requires repayment of the loan if the tenant moves out of the leased house or if a new lease contract is not signed after the lease contract ends. The bank informed that changing the purpose and extending the maturity of the fund loan was not possible.

The FSS explained, "At the time of the extension application, the borrower must be a household head without a house, have signed a lease contract for the target house, and be registered and residing in the house," and "If the borrower temporarily registers at a place other than the lease residence, such as the parents' residence, receives the deposit back from the landlord, and does not repay the loan, it may constitute disqualification for the fund loan."

The FSS also introduced a case where a bank offset a Housing Subscription Savings account under the debtor's name, which was not provided as collateral, due to long-term loan delinquency. Mr. Park filed a complaint stating that his subscription rights were lost because the bank offset the Housing Subscription Savings account against the principal and interest of a credit loan due to long-term delinquency.

The FSS advised, "According to the basic terms and conditions of credit transactions, if the term benefit is lost due to long-term delinquency, the bank can offset deposits such as Housing Subscription Savings against the loan principal and interest after sending a written notice of offset plan," and "Since the bank sends important notifications such as offset notices to the debtor's address, it is necessary to promptly report address changes when moving."