Exceptions to the June 17 Measures... Is Loan Extension Not Allowed if Price Rises Above 300 Million?

[Asia Economy Reporter Jo Gang-wook] If a house bought for less than 300 million KRW has exceeded 300 million KRW due to price increase, is the extension of the jeonse loan restricted? The answer is that extension is possible. This is because the apartment exceeding 300 million KRW was not 'purchased,' so it is not subject to regulation.

Recently, as market confusion increased regarding the jeonse loan regulations included in the June 17 real estate measures, financial authorities have provided explanations about the regulatory details and exceptions.

According to the Financial Services Commission on the 22nd, under this measure, if you purchase an apartment exceeding 300 million KRW (regulated apartment) in speculative areas or speculative overheating districts and then try to receive a jeonse loan, the jeonse loan will be restricted.

Exceptions are the same as those in the December 16 measures, such as receiving a jeonse loan for actual demand reasons like job relocation or children's education.

If you obtain a jeonse house outside the special city or metropolitan city where the purchased apartment is located due to actual demand such as job relocation, children's education, parental support, nursing/treatment, or school violence victimization, and all household members actually reside in both the purchased apartment and the jeonse house, the jeonse loan is allowed.

The restriction on jeonse loans applies after the regulation implementation date. It is scheduled to be implemented in mid-July after revising the guarantee institution regulations such as those of the Korea Housing Finance Corporation and HUG. This will be confirmed and announced later.

Also, if a person who has applied for and is using a jeonse loan purchases a regulated apartment, the jeonse loan will be immediately recalled. However, if there is a remaining period in the existing lease contract of the purchased apartment, the recall regulation will be deferred.

The Financial Services Commission explained that the jeonse loan regulation in the June 17 measures fully applies only when both active acts of the borrower?purchasing a regulated apartment and applying for a jeonse loan?occur after the regulation implementation date.

Below are the main application cases of the June 17 jeonse loan regulation as announced by the Financial Services Commission.

▶ If the house was under 300 million KRW at purchase but later exceeded 300 million KRW due to price increase, is jeonse loan extension not allowed?

→ This is not true. Since the apartment exceeding 300 million KRW was not 'purchased,' it is not subject to regulation.

▶ If a regulated apartment is inherited, is jeonse loan extension not allowed?

→ This is not true. Since the regulated apartment was not 'purchased,' it is not subject to regulation.

▶ What if a regulated apartment was already purchased before the regulation implementation date (including pre-sale rights, move-in rights, and apartment purchase contracts before the regulation date, excluding provisional contracts)?

→ Since restrictions apply only to purchases made after the regulation implementation date, it is not subject to regulation.

▶ What if a person already using a jeonse loan before the regulation implementation date purchases a regulated apartment after the regulation date (including cases where the jeonse contract was signed before the regulation date)?

→ The jeonse loan is not subject to recall. However, extension of the current jeonse loan maturity is restricted. After maturity, the meaning is to actually reside in the purchased apartment.

▶ For a person who applied for and is using a jeonse loan after the regulation implementation date, if they purchase pre-sale rights or move-in rights of a regulated apartment during use, is the jeonse loan immediately recalled?

→ In this recall regulation, the ‘purchase time’ means the time of acquiring apartment ownership (date of registration transfer completion), and the loan is not immediately recalled.

※ If ownership acquisition such as registration does not occur by the jeonse loan maturity, extension of maturity is possible. However, at the time of registration, the jeonse loan will be recalled, so repayment of the jeonse loan and actual residence in the purchased apartment are required.

▶ Does the regulation apply when purchasing housing other than apartments, such as villas or multi-family houses?

→ Since the regulation targets apartments with high concerns of gap investment, it is not subject to regulation.

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