From the 2nd of next month, 'Didimdol Loan Management Measures'
Applied only to metropolitan area apartments
Loan limits reduced for existing metropolitan apartments due to room control system
New metropolitan apartments blocked from balance loans before move-in
Starting from the 2nd of next month, the loan limit will be reduced when a non-homeowner uses the Didimdol loan to purchase an existing apartment in the Seoul metropolitan area. With the application of the room deduction, if you buy a 500 million KRW apartment in Gyeonggi-do, the loan limit will decrease by 48 million KRW compared to now. The option to pay the balance with a Didimdol loan when purchasing a new apartment will also be blocked.
Didimdol Loan Limit Reduction... "Application of Room Deduction"
On the 6th, the Ministry of Land, Infrastructure and Transport announced that it will implement the "Customized Management Plan for Didimdol Loans" with these details starting from the 2nd of next month. This measure aims to stably manage the housing market and household debt and to enhance the sustainability of the Housing and Urban Fund. This plan applies only to apartments in the Seoul metropolitan area and does not apply to houses in other regions or non-apartments in the metropolitan area.
From now on, when purchasing an existing apartment in the metropolitan area, the loan limit will be reduced by applying the "room deduction." The room deduction is a method of subtracting the priority repayment amount from the existing loanable amount to protect tenants of the house when taking out a mortgage loan. The room deduction amounts are 55 million KRW for Seoul and 48 million KRW for Gyeonggi-do. This applies to both first-time homebuyers and non-homeowners.
An official from the Ministry of Land, Infrastructure and Transport said, "The room deduction, which was previously applied at the bank's discretion, will be continuously applied from now on," adding, "At this time, the loan-to-value ratio (LTV) of 80% for first-time buyers and 70% for non-homeowners will remain unchanged."
For example, when a non-homeowner buys a 500 million KRW apartment in Gyeonggi-do, the loan limit decreases from 350 million KRW to 320.2 million KRW. The existing loan limit is 70% of the house price (350 million KRW), but since the priority repayment amount is 48 million KRW, the loanable amount is reduced by that amount.
Seoul Walking Column - A residential complex in downtown Seoul where apartments and houses coexist. Photo by Yongjun Cho jun21@
If the loan was taken and the sales contract was signed before the 2nd of next month, the room deduction will not be applied. Also, if the tenant of the purchased house remains and immediate move-in is difficult, the loan limit will not be reduced only if the balance payment date is in the first half of next year.
Balance Loan Before Moving into New Apartment Also Blocked... Exceptions for Low-Income Households and Newborn Special Loans
When purchasing a new apartment in the metropolitan area, if the move-in date is after the first half of next year, using the Didimdol loan for the balance payment loan (post-encumbrance loan) will also be blocked. The post-encumbrance loan is made when the new apartment is purchased but ownership transfer has not yet occurred before moving in. Once ownership is established, it is converted into a mortgage loan. However, if the recruitment announcement for residents is made by the 1st of next month and the apartment move-in is within the first half of next year, such loans will be allowed. The same criteria apply when purchasing pre-sale rights.
An official from the Ministry of Land, Infrastructure and Transport said, "Usually, in apartment pre-sales, intermediate payments are made 4 to 6 times, and the balance is paid about six months later," adding, "Considering those who have made the last intermediate payment, we decided to set an exception until the first half of next year."
Households with an annual income of 40 million KRW or less buying apartments priced at 300 million KRW or less in the metropolitan area are exempt from these regulations. This measure considers the relatively heavy burden caused by the reduction in loan limits. A Ministry official said, "The price-to-income ratio (PIR) for housing in Korea is usually around 10 to 11 times, but for low-income households buying homes priced at 300 million KRW or less, the PIR is about 7.5 times," adding, "In such cases, if the room deduction imposes a burden on low-income households, we judged that an exception should be recognized."
Newborn special loans and loans exclusively for victims of jeonse fraud are also recognized as exceptions under this management plan.
Kim Gyu-cheol, Director of the Housing and Land Office at the Ministry of Land, Infrastructure and Transport, said, "We will continue to promote predictable and customized management of Didimdol loans reflecting actual demand and market conditions."
Meanwhile, starting from the 2nd of next month, the income requirement for dual-income couples applying for the newborn special loan will be raised from 130 million KRW to 200 million KRW. Loan conditions such as interest rates will be announced later.
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