Working Guidelines Distributed to Banks
Single-Home Owners Must Sell Existing Property to Obtain Balance Loans After Winning Subscription Lotteries
The financial authorities have decided to exclude products for low-income individuals from the calculation of credit loan limits. In addition, if someone purchased a home in a land transaction permit area, the previous regulations will only apply if the permit was submitted to the local government by June 27, the day before the new regulations were announced. Previously, the Financial Services Commission had announced household debt management measures, limiting the total amount of credit loans that can be obtained from financial institutions to within the borrower's annual income.
According to the financial authorities and the financial sector on July 3, the Financial Services Commission distributed a working guideline containing these details to financial institutions the previous day.
Earlier, the Financial Services Commission had announced household debt management measures, including limiting the maximum amount of mortgage loans in the Seoul metropolitan area and other regulated regions to 600 million won, and also stated that the limit for credit loans would be restricted to within annual income.
Following this, confusion arose regarding the timing of regulation enforcement and the calculation of loan limits, prompting the Financial Services Commission to provide additional guidelines in a Q&A format.
According to the guidelines, the credit loan limit is determined based on the total amount of credit loans from all financial institutions. Although card loans are classified as "other loans" by supervisory agencies, they will be included in the calculation of the credit loan limit.
However, in response to concerns that urgent funding for low-income individuals could be blocked, the authorities decided to exclude from the limit calculation: credit loans for those with annual income of 35 million won or less, financial products for low-income individuals, cases where a loan obligation is inevitably assumed due to inheritance, and emergency living stabilization funds for purposes such as marriage, funerals, or surgery.
For buyers of homes subject to the land transaction permit system, only those who applied for transaction permits to the local government before the date of the regulatory announcement will be subject to the previous regulations, taking into account the structure in which the official sales contract is signed after obtaining the permit.
If a single-home owner in the Seoul metropolitan area wins a subscription lottery, they will not be able to obtain balance loans unless they sell their existing home. The existing home must be disposed of within six months from the date of registration of ownership transfer for the new home. However, if the recruitment notice for residents was issued before the regulations, the previous rules will apply.
For successful bidders in home auctions who receive a balance loan secured by the home, the six-month move-in requirement and the 600 million won limit will apply.
The Financial Services Commission explained that, in order to obtain a jeonse deposit return loan (a mortgage loan for living stabilization purposes) of 100 million won or more to return a tenant's deposit, the lease contract must have been signed by June 27, when the lending regulations were announced.
If the lease contract was signed after that date, only loans within the 100 million won limit will be allowed under the new regulations.
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