Confusion Among Genuine Buyers Over Complex 'Real Estate Measures'..."What About Loans for Pre-sale Rights?"

Complex Regulations and Application Timelines by Situation
Difficulty Connecting to Ministry of Land, Infrastructure and Transport and Financial Services Commission by Phone
"Lack of Clear Guidelines... Increasing Confusion"

(Photo by Yonhap News)

[Asia Economy Reporter Moon Jiwon] Since the announcement of the 'June 17 Real Estate Measures,' confusion among genuine buyers regarding loan limits and other regulations has been growing. In particular, residents of newly regulated areas such as Incheon often find it difficult to understand which regulations apply and from when, leading to frustration. This is due to the government's failure to clearly communicate detailed regulations and exceptions following the complex policy announcement.

According to the real estate industry on the 20th, confusion has arisen among successful applicants of the recently sold 'Geomam Station Royal Park City Prugio' in Seo-gu, Incheon, ahead of the mid-payment loan for the pre-sale rights. This area was originally a non-regulated zone but was designated as a speculative overheated district all at once under the June 17 measures. Consequently, loan limits, resale restrictions, and taxes have changed significantly.

Genuine buyers who applied for pre-sale in the previously non-regulated area and won are now concerned about the current Loan-to-Value ratio (LTV). Being designated as a speculative overheated district means the LTV is limited to 40% for properties under 900 million KRW, 20% for those exceeding 900 million KRW, and 0% for those over 1.5 billion KRW.

An industry insider said, "We have started receiving documents from preliminary winners, and many people expressed confusion about how the loan limits have changed," adding, "There is significant confusion due to the lack of clear explanations from the Ministry of Land, Infrastructure and Transport and the Financial Services Commission."

To conclude, in the case of pre-sale complexes, winners who are 'homeless' will receive the LTV applicable to the previous non-regulated area until they obtain the mid-payment loan. This is to prevent them from losing their pre-sale rights because they cannot pay the mid-payment due to suddenly lowered loan limits.

A Financial Services Commission official stated, "For pre-sale housing, once you win, you have already used your subscription savings, which creates an expected benefit," and added, "Homeless buyers are considered genuine buyers and are subject to the existing regulations."

However, for the balance loan taken at the time of move-in, the changed LTV (40%) standard applies. Newly sold complexes have about two years until the balance loan, and since the loan limit for the balance loan is based on market price rather than the pre-sale price, it usually does not pose a significant burden. However, genuine buyers with tight finances may face difficulties in securing funds and might be unable to pay the balance later.

A newlywed successful applicant said, "With apartment prices rising continuously, I planned to borrow as much as possible to buy a home as soon as possible, but the sudden designation as a regulated area disrupted my plans."

For those owning more than one home, the changed standards also apply to mid-payment loans, increasing the likelihood of funding difficulties. In the case of existing home sales rather than pre-sale complexes, only homeless buyers who have paid the deposit can receive loans under the non-regulated area standards.

The problem is that the general public finds it difficult to understand the detailed timing and content of these regulations. It is also not easy to get through when contacting the offices of the Ministry of Land, Infrastructure and Transport or the Financial Services Commission. This inevitably leads to increased confusion, especially among genuine buyers who need to plan their financing immediately.

An industry insider said, "Without clear guidelines from the Financial Services Commission and the Ministry of Land, Infrastructure and Transport, we cannot properly explain to successful applicants," and added, "If the government provided clear explanations, the current confusion would not exist."

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