"Using Early Withdrawal of Retirement Pension for Full-Leverage"... 'Bypass Loans' Rampant Amid High-Intensity Regulations

Financial Planning and Office Worker Communities Buzz Over 'Yeongkkeul Law'
Direct Examination Shows It Is Mostly Feasible
Cases Where Husband Is Homeowner and Wife Is Tenant
Experts Criticize "Market Distortion Due to Successive Regulations"

[Asia Economy Reporter Song Seung-seop] Seong Ji-hwan (34, pseudonym), who lives in Seoul, recently fully withdrew his retirement pension of about 40 million won. Although he had 180 million won in savings, time deposits, and liquidated stock and Bitcoin accounts, and additionally took out a credit loan of up to 80 million won, it was still far from enough to buy a house. Seong said, "My income is not low, but the loan path is blocked, so there is no way," adding, "I want to find a loan method, even through secondary financial institutions or P2P, to buy my own home in a high-priced area (a euphemism for expensive housing areas)."

Real demanders, whose funds have been cut off due to the financial authorities' all-out loan regulations, are seeking detours. In investment and office worker communities, methods of 영끌 (pulling together all resources, including borrowing to the limit) that cross the line between legal and illegal are openly posted. Critics point out that the government regulates while the market evades, causing various contradictions and controversies.

On the 25th, a post discussing loans not regulated by the government became a hot topic on an office worker community site. Users said, "It is common for people to withdraw their retirement pensions early to 영끌," and expressed concerns, "If the government amends the Employee Retirement Benefit Security Act or adds conditions, this method might be blocked." Retirement pensions, prepared to guarantee the public's old-age life, have become a representative 영끌 means.

According to checks through financial institutions, although early withdrawal of retirement pensions is generally known to be difficult, it is possible if certain reasons and conditions are met. A typical example is a defined contribution (DC) retirement pension subscriber who is a non-homeowner purchasing a house in their name or bearing the cost of jeonse (long-term deposit lease) or deposit. According to the '2021 Housing Finance Research' published by the Korea Housing Finance Corporation in April, as of 2019, 72,830 people withdrew 2.7758 trillion won early, about 2 to 3 times more than in 2015. Among them, 52% cited house purchase and residential lease as reasons.

Houseowner Husband and Spouse Wife? ... The Social Phenomenon Created by Layered Regulations

Methods to secure additional credit loans through spouses are also being shared. Since the end of last year, if a credit loan exceeding 100 million won is used for house purchase, it is subject to recovery and other regulations, but spouses without ownership can take out additional credit loans. As a result, in many cases, the higher-income spouse takes out a loan exceeding 100 million won to supplement the house purchase, while the lower-income spouse borrows money within the 100 million won limit.

Many also recommend using policy loans if you are an insurance policyholder. Policy loans are loan products that borrow money using the surrender value of an insurance product as collateral. Although it varies by insurer and product, it is generally possible to borrow 50-95% of the surrender value.

In some cases, people who have not registered their marriage or who have divorced take their spouse as a tenant. In this case, the legally 'unrelated' spouse can receive a jeonse loan as a tenant. Although there is a risk of recovery upon marriage registration, it is secretly used because it can secure funds amounting to hundreds of millions of won.

Civil servants and public enterprise employees are considering pension loans and in-house loans. In the case of civil servant pension loans, loans of up to 70 million won are possible, and they are exempt from Loan-to-Value (LTV) and Debt Service Ratio (DSR) regulations. Recently, among public institution employees, there was controversy over reverse discrimination as the in-house loan limit was restricted to 70 million won and became subject to LTV application.

Experts point out that this social phenomenon was created by the government layering regulations whenever problems arise. Professor Kim Dae-jong of the Department of Business Administration at Sejong University criticized, "Market regulations inevitably cause distortions," adding, "Since the government failed to control housing prices and implemented regulations, demanders are pulling money from here and there."

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