[Practical Finance] Easing Housing Cost Burden for Low-Income Groups... Reduction of Standard Guarantee Fee Rate for Jeonse Loans

Guarantee Fee Rate Reduced from 0.12~0.40% to 0.06~0.20%
Application Must Be Made Within 3 Months from the Earlier of Payment Date or Move-in Date
Significant Reduction in Guarantee Fee Burden for Youth, Newlyweds, and Single-Parent Families

[Asia Economy Reporter Kwangho Lee]Ma Sunju (46 years old, pseudonym), a housewife with a child entering elementary school next year, recently signed a contract for an apartment near the elementary school (deposit 480 million KRW). While looking for loan products to cover the insufficient deposit of 200 million KRW, Ma felt burdened by the guarantee fee. Then, she heard from an acquaintance that the Korea Housing Finance Corporation's standard guarantee fee rate for jeonse loan guarantees would be reduced. Through the guarantee fee rate reduction, she saved 220,000 KRW annually, from the previous 500,000 KRW to 280,000 KRW, totaling 440,000 KRW over the two-year jeonse contract period.

From this month, the reduction in the guarantee fee rate for the Korea Housing Finance Corporation's jeonse loan guarantees has further eased the housing cost burden for low-income households.

According to the Korea Housing Finance Corporation on the 21st, the standard guarantee fee rate applied according to the lease deposit amount has been lowered from the previous 0.12?0.40% to 0.06?0.20%. Specifically, it was adjusted to 0.06% annually for deposits up to 100 million KRW, 0.08% for over 100 million KRW up to 200 million KRW, 0.10% for over 200 million KRW up to 300 million KRW, 0.12% for over 300 million KRW up to 400 million KRW, 0.14% for over 400 million KRW up to 500 million KRW, and 0.20% for over 500 million KRW. Accordingly, it is expected that the guarantee fee payment burden will decrease by an average of 20,000 KRW to a maximum of 180,000 KRW annually for customers using the jeonse loan guarantee.

Eligible applicants are ▲Korean nationals (excluding those with permanent residency rights abroad under foreign law) ▲household heads who have signed a lease contract with a deposit of 500 million KRW (300 million KRW in provincial areas) or less and have paid at least 5% of the deposit ▲own one or fewer houses combined with their spouse ▲and have not acquired an apartment over 300 million KRW in speculative or overheated speculation areas with their spouse (including fianc?s) since the 10th of this month.

Significant Reduction in Guarantee Fee Burden for Youth, Newlyweds, and Single-Parent Households

The application period for new lease contracts is within three months from the earlier date between the final payment date on the lease contract and the resident registration move-in date. For lease renewals, the application must be made within three months from the contract renewal date (the start date of the lease period on the contract), and the guarantee application date must be at least three months after the resident registration move-in date.

Additionally, the standard guarantee fee rate for the jeonse deposit return guarantee (Jeonse Keeper Guarantee) was lowered by 0.03 percentage points from 0.07% to 0.04%. Users of the Jeonse Keeper Guarantee will pay an average annual guarantee fee of 120,000 KRW, reducing their previous guarantee fee burden by 90,000 KRW.

Furthermore, the minimum guarantee fee rate for monthly and jeonse loan guarantees was reduced by 60%, from 0.05% to 0.02%. For customers such as youth, newlyweds, and single-parent households who qualify for the minimum guarantee fee rate, the guarantee fee is expected to decrease from an average of 50,000 KRW annually to 20,000 KRW, reducing the average guarantee fee burden by 30,000 KRW.

A representative from the Korea Housing Finance Corporation stated, "This reduction in guarantee fee rates is expected to somewhat alleviate the financial burden on low-income households," and added, "We will continue to strive to ease housing cost burdens for low-income households."

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