After Personal and Mortgage Loans,
Jeonse Loans Also Switch to Online Platforms
Starting tomorrow, the refinancing service for jeonse loan funds will be launched for all types of housing. Following last year's credit loan refinancing and the apartment mortgage refinancing service launched on the 9th of this month, the refinancing service has now been expanded to include jeonse loans, a major housing finance product for low-income and homeless households.
The Financial Services Commission announced on the 30th that from the 31st, the jeonse loan refinancing service will be launched through an online, one-stop refinancing loan infrastructure.
Jeonse loan refinancing applies to guaranteed jeonse loans for all types of housing, including apartments, villas, officetels, and detached houses. Guaranteed jeonse loans refer to loans secured by guarantees from the Korea Housing Finance Corporation (HF), Housing and Urban Guarantee Corporation (HUG), or SGI Seoul Guarantee, and are loans applied for within three months from the earlier of the balance payment date on the lease contract or the resident registration move-in date.
However, to prevent excessive loan transfers between financial institutions, refinancing is only possible after three months have passed since the original jeonse loan was taken out. Additionally, considering the guarantee product handling criteria of the existing jeonse loan guarantee institution, refinancing is allowed only until half of the jeonse lease contract period has elapsed.
Refinancing is also possible when renewing the jeonse lease contract. In this case, new loan applications can generally be made from two months before to 15 days before the expiration of the existing jeonse contract period, taking into account the timing of the lease contract renewal.
The loan limit for jeonse loan refinancing is restricted to the 'remaining balance' of the existing loan. However, if the jeonse deposit increases upon lease renewal, the new jeonse loan limit can be increased by the amount of the deposit increase within the guarantee limit of each guarantee institution. For example, if a jeonse deposit of 100 million KRW had an 80 million KRW loan (80% guarantee limit), and the deposit increases to 120 million KRW upon contract renewal, the jeonse loan limit can increase up to 96 million KRW.
Similar to credit and mortgage loan refinancing, refinancing is not possible if the jeonse loan is in arrears or involved in legal disputes. Also, refinancing is restricted for low-interest policy financial products and loans handled through agreements between local governments and financial companies.
When refinancing jeonse loans, refinancing loans can only be made with guaranteed loans from the same guarantee institution that provided the guarantee for the existing loan. For example, a borrower with an HF-guaranteed loan can only refinance with an HF-guaranteed loan product. This is to prevent borrower confusion and to enable financial companies to quickly process guarantee requirement reviews, as each guarantee institution has different eligibility and limits.
Therefore, borrowers attempting refinancing through a financial company's own application need to check the guarantee institution partnership status of each financial company in advance. When using loan comparison platforms, borrowers do not need to separately check the guarantee institution partnership status, as the platform compares and recommends new jeonse loan products with the same guarantee institution as the borrower's existing jeonse loan.
With this jeonse loan refinancing service, borrowers can refinance existing jeonse loans obtained from a total of 21 financial companies into new jeonse loan products from 14 financial companies (KB Kookmin, Shinhan, Hana, Woori, NH Nonghyup, IBK Industrial Bank, Sh Suhyup, Busan, Daegu, Gyeongnam, Gwangju, Jeonbuk, Kakao, K Bank). These 14 financial companies’ own apps and four loan comparison platforms (Naver Pay, Kakao Pay, Toss, Finda) allow borrowers to check their existing jeonse loans and compare them with various financial companies’ jeonse loan products.
The financial authorities plan to continuously review ways to improve the refinancing service. Currently, the mortgage refinancing service only targets apartments, but by the end of June, it plans to expand the target to include villas and officetels where real-time market price inquiries are possible. The jeonse loan refinancing service currently limits refinancing to before half of the lease contract period has elapsed, considering guarantee institution standards, but plans to review expanding this period.
A financial authority official stated, "Together with the Korea Financial Telecommunications & Clearings Institute and industry associations, we will closely monitor the service usage status at the early stage of the jeonse loan refinancing service to prevent inconvenience to financial consumers due to system delays," and added, "Based on our experience operating loan refinancing services, we will continue to review service improvement plans to enable more financial consumers to conveniently use the refinancing service."
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