"Jeonse Loans Like Mortgage Loans"... 6 Banks Jointly Launch Jeonse Loans with Principal and Interest Installment Repayment

If repayment becomes difficult due to circumstances, it can be changed to a lump-sum repayment at maturity instead of being classified as overdue
It is also possible to prepare a large sum of money at the end of the loan by repaying as much as you can... Income deduction benefits

[Asia Economy Reporter Kim Min-young] A partial installment repayment jeonse loan product, which allows repayment of both principal and interest like a mortgage loan, will be launched on the 30th. It is a product that can be converted to a lump-sum repayment at maturity if desired while repaying the principal and interest.

According to the financial sector on the 29th, six domestic banks including Shinhan, KB Kookmin, Hana, Woori, NH Nonghyup, and Industrial Bank of Korea will launch the partial installment repayment jeonse loan product on the 30th.

Earlier in June, the Financial Services Commission announced support for banks to launch partial installment repayment jeonse loan products. Initially, only Kookmin Bank and Woori Bank planned to launch the product, but after consultations with the Korea Housing Finance Corporation, the other four banks joined, expanding consumer accessibility.

This product is designed with a structure that allows repayment of both principal and interest during the jeonse contract period (2 years). Although some banks previously sold installment repayment jeonse loan products, there were difficulties as repaying only the interest without the principal was classified as delinquency.

The new product allows borrowers to switch to lump-sum repayment at maturity even if they stop installment repayments due to financial circumstances. In this case, it is not classified as delinquency. This feature was added thanks to the Korea Housing Finance Corporation increasing the guarantee ratio to banks from 90% to 100%, reducing risk burden. Since it is not delinquency, it does not affect the limit at contract renewal. The installment repayment amount is at least 5% of the total principal and is repaid over the entire contract period. There is no pledge setting on collateral or landlord consent procedure.

From the borrower's perspective, the fact that the repaid principal returns as a lump sum at the end of the contract is also favorable. In the case of lump-sum repayment type jeonse loans, when the tenant applies for a loan at the bank, the money is immediately deposited to the landlord, and when the contract ends, the tenant must repay the bank after receiving the deposit from the landlord. If the tenant has repaid part of the principal in the meantime, they can deduct that amount from the returned deposit and repay the bank accordingly.

A financial sector official said, "Although the loan principal and interest are repaid, it is like saving money because the borrower can receive part of the principal as a lump sum at the end of the jeonse contract," adding, "There is no need to pay interest income tax (15.4%) like with installment savings maturity, so it effectively enjoys a tax-exempt benefit."

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