Korea Housing Finance Corporation Launches Home Pension for Small Business Loan Repayment

Expansion of Individual Withdrawals
Now Possible to Repay Loans from Financial Institutions for Small Business Owners

A reverse mortgage product for repaying small business loans will be launched. In addition, reverse mortgage subscribers will now be able to use individual withdrawals to pay for redevelopment, reconstruction, small-scale housing maintenance, and remodeling contributions for their collateralized homes.

Korea Housing Finance Corporation (President Kim Kyunghwan) announced on the 31st that starting April 1, it will improve the reverse mortgage system and expand the scope of individual withdrawals to support small business owners and others.

The newly introduced reverse mortgage for small business loan repayment allows small business owners or their spouses to repay loans from the government or financial institutions using individual withdrawals from their reverse mortgage. The individual withdrawal limit has been expanded to between 50% and 90% of the loan limit. If the applicant proves their small business status with a 'Small Business Owner Certificate,' they can withdraw funds for loan repayment at any time within six months from the first payment date of the reverse mortgage.

However, when using this product, the small business owner or their spouse must file a business closure report within six months from the first payment date of the reverse mortgage, and the withdrawn amount must be used solely for loan repayment. If the loan is not repaid or business closure is not reported within the deadline, pension payments will be suspended and the reverse mortgage contract will be terminated.

Additionally, if the collateralized home of a reverse mortgage subscriber becomes subject to a maintenance project such as reconstruction and the subscriber is required to pay a contribution, up to 70% of the loan limit can now be withdrawn individually. The contributions that can be paid with individual withdrawals must be scheduled for payment after the date of the withdrawal application, and the applicant must pay the contribution within one month after the withdrawal is made.

A representative from the corporation stated, "We expect that this system improvement will help small business owners struggling with loan repayment and reverse mortgage subscribers participating in maintenance projects to secure the necessary funds," and added, "We will continue to operate the reverse mortgage system to support the retirement life of the elderly."