DSR 40% Cap for Homeowners to Take Effect from June 11
SGI Seoul Guarantee Insurance announced on May 27 that it will strengthen the tenant repayment ability screening for its jeonse loan products starting from June 11.
Previously, the company assessed the tenant's annual interest payment burden relative to their annual income. However, going forward, for tenants who already own a home and whose loan-to-deposit ratio exceeds 60% of the jeonse deposit, a total debt service ratio (DSR) cap of 40% will be applied. For tenants who do not fall under this category, the current standard?an annual interest payment burden within 40% of annual income?will continue to apply.
This measure will apply to tenants applying for loans on or after June 11. However, to protect existing customers, tenants who are already using SGI Seoul Guarantee Insurance's jeonse guarantee and are renewing their loans will continue to be subject to the current standards, even if they apply for a loan after June 11. In addition, customers who signed their jeonse contracts before the implementation of the new system but apply for a new loan after June 11 will also be eligible for the current standards.
The guarantee ratio provided by SGI Seoul Guarantee Insurance to lending financial institutions will be adjusted to 90%, the same as Korea Housing Finance Corporation (HF) and Housing and Urban Guarantee Corporation (HUG).
A representative from SGI Seoul Guarantee Insurance stated, "The strengthening of the screening criteria is a preemptive measure to ensure the stable operation of our products," and added, "Tenants should note that the jeonse loan guarantee not only evaluates the borrower's repayment ability, but also comprehensively assesses factors such as credit score."
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