Apgujeong Hyundai 92-born homeowner who bought for 8 billion won... turns out it was a 'full loan'

Agent "Apartment Purchase for Actual Residence"
"Mid-level Professionals, Legitimate Financial Transactions"

Recently, young wealthy individuals have attracted attention by purchasing ultra-high-end apartments. It was initially reported that a person born in the 1990s bought the Hyundai Apartment in Apgujeong, Gangnam-gu, Seoul, for 8 billion KRW entirely in cash. However, it has been revealed that the full amount of the house price was actually covered by loans.

According to SBS on the 28th, Mr. A (32), who purchased the apartment, is estimated to have covered the entire purchase price of 8 billion KRW through loans. Mr. A is the child of the CEO of Company B and received shares of Company B from his father as a gift several years ago. To pay the gift tax, which can be as high as 50%, he also applied for installment payment using the shares as collateral.

Earlier this year, Mr. A signed a contract to purchase a 196㎡ (13th floor) unit in Hyundai Apartment, Apgujeong, for 8 billion KRW and paid the balance in April. The mortgage on the unit Mr. A purchased is 1.54 billion KRW. Considering that commercial banks usually set mortgages at 110-130% of the loan amount, it appears that Mr. A received approximately 1.4 billion KRW as a housing mortgage loan (HML).

Initially, it was reported that the remaining amount, excluding this, was paid from his own cash reserves, but it has been confirmed that last month Mr. A took out a loan of 6.6 billion KRW using his shares as collateral.

If Mr. A borrowed 1.4 billion KRW at an annual interest rate of 4% with a 40-year term for the housing mortgage loan, the annual principal and interest repayment would be about 70 million KRW. Additionally, applying an interest rate of 4.95% for one year on the 6.6 billion KRW stock-backed loan results in an annual interest of 326.7 million KRW. In other words, the total annual principal and interest repayment for the two loans amounts to approximately 400 million KRW.

Currently, when purchasing real estate, the Debt Service Ratio (DSR) regulation limits the annual principal and interest repayment amount to 40% of the annual income. Based on this, Mr. A’s annual income must exceed 1 billion KRW. This seems possible because the dividend yield on the Company B shares held by Mr. A is high. The interim and final dividends Mr. A received in the past year amount to about 1.5 billion KRW.

Mr. A’s representative told SBS, "Mr. A is a mid-level professional with a high income who maintains an independent livelihood and purchased the apartment for actual residence," adding, "Mr. A conducted legitimate financial transactions based on his assets and income as a professional."

Meanwhile, there has been a continuous buying spree of ultra-high-end luxury homes by young wealthy individuals located in Gangnam and Yongsan districts of Seoul. A unit in Hannam The Hill, Yongsan-gu, Seoul (exclusive area 233㎡, 7th floor) was traded for 9.45 billion KRW in January. The buyer of this property was born in 1998 and is in their mid-20s. Since no separate mortgage was confirmed on this property, it is presumed to have been purchased entirely in cash.

Also, the Nine One Hannam in Hannam-dong, Yongsan-gu, Seoul (exclusive area 244㎡), previously owned by singer Jang Yoon-jung and her spouse, was sold for 12 billion KRW on the 11th of last month. The ownership registration has been completed, and the owner is known to have been born in 1989.