"Complete Ban on Gap Investment"... All Jeonse Loan Paths Blocked for Owners of Houses Over 900 Million Won

If You Take a Jeonse Loan and Buy a High-Priced House, It Will Be Reclaimed in Almost All Cases

[Asia Economy Reporter Kim Hyo-jin] Starting from the 20th, similar to public guarantee institutions such as the Korea Housing Finance Corporation (KHFC) and the Housing and Urban Guarantee Corporation (HUG), the private SGI Seoul Guarantee Insurance (SGI) will also restrict jeonse loan guarantees for owners of high-priced homes valued over 900 million KRW. Furthermore, if borrowers who have received jeonse loan guarantees from these institutions purchase high-priced homes or become multi-homeowners, the jeonse loans will be recalled in almost all cases without exception. This measure aims to more strictly block 'gap investment,' where buyers purchase homes with jeonse deposits for speculative purposes.

The Financial Services Commission announced on the 16th follow-up measures related to jeonse loans as part of the 'December 16 Housing Market Stabilization Plan.'

The restriction on jeonse loans for owners of homes valued over 900 million KRW under public guarantees has been in effect since November 11 of last year, following measures announced in October. This new measure extends the guarantee restrictions to areas utilizing private capital.

High-priced home borrowers currently using SGI jeonse loan guarantees before the 20th will be allowed to extend their guarantees upon maturity, but if moving to a new jeonse residence or increasing the loan amount is involved, it will be considered a new loan guarantee, and in principle, maturity extension will not be permitted.

However, to prevent sudden housing instability due to the suspension of jeonse loans, borrowers owning a single high-priced home valued between 900 million KRW and 1.5 billion KRW as of the 20th who reuse loans without increasing the amount due to moving to a new jeonse residence will be allowed to use SGI guarantees once temporarily until April 20. For owners of ultra-high-priced homes valued over 1.5 billion KRW, this temporary grace period will not apply, and regulations will be fully enforced.

Exceptions are recognized for cases where moving to a jeonse residence outside the city or county of the owned home is due to genuine needs such as job transfers, career changes, children's education, medical treatment, or parental care. Even in such cases, household members must reside in both the jeonse residence and the owned high-priced home.

Financial Services Commission

The jeonse loan recall regulation will apply to borrowers who apply for jeonse loans after the 20th. The financial authorities have required banks to amend their terms and conditions so that at the time of the jeonse loan agreement, borrowers sign an additional agreement stating, "If you acquire a high-priced home or become a multi-homeowner, the loan will be recalled."

Borrowers currently using jeonse loan guarantees before the 20th who acquire high-priced homes or become multi-homeowners after the enforcement date will not be subject to immediate loan recall but will face restrictions on loan extension upon maturity. However, in cases of acquiring high-priced homes or transitioning to multi-homeownership through inheritance, loan recall will be deferred until the jeonse loan maturity.

The financial authorities, together with the Financial Supervisory Service and guarantee institutions, will form a joint inspection team to visit branches of major banks from the enforcement date to monitor the application of regulations. They also plan to prevent evasion or circumvention of jeonse loan guarantee restrictions through individual guidance to banks.

Simultaneously, they will inspect the status of unsecured jeonse loans by financial institution to ensure that loans do not increase after the regulation's implementation. If detailed handling data analysis determines that these loans are being used to evade jeonse loan regulations, additional measures such as restricting public guarantee supply to the relevant financial institutions will be taken.

A Financial Services Commission official stated, "We must respond strictly to gap investments made through jeonse loans that cause instability in the housing market," adding, "We will closely monitor future developments and consider additional measures if necessary."

Financial Services Commission

This content was produced with the assistance of AI translation services.