Financial Services Commission Vice Chairman: "Obligation to Dispose of Existing Homes for Mortgage Loans Eased to 2 Years" [6·21 Real Estate Measures]

Kim So-young, Vice Chairman of the Financial Services Commission, is speaking at the 1st Real Estate Related Ministers' Meeting held at the Government Seoul Office in Jongno-gu, Seoul on the 21st. Photo by Kim Hyun-min kimhyun81@

[Asia Economy Reporter Song Hwajeong] The requirement to dispose of an existing home within six months when obtaining a mortgage loan for purchasing a new home in regulated areas will be improved.

Kim Soyoung, Vice Chairman of the Financial Services Commission, stated in her opening remarks at the 1st Real Estate Ministers' Meeting held on the 21st at the Government Seoul Office, chaired by Deputy Prime Minister and Minister of Economy and Finance Choo Kyung-ho, "We will normalize the excessive loan regulations previously introduced to support the free housing activities of the public."

Vice Chairman Kim emphasized, "We will improve the disposal and move-in requirements within six months when handling mortgage loans," adding, "We will ease the existing home disposal obligation to two years to align with the non-taxation conditions for capital gains tax exemption for temporary two-home owners and abolish the new home move-in obligation."

Earlier, the government extended the deadline for disposing of an existing home for temporary two-home owners to qualify for capital gains tax exemption from one year to two years in May. If the move-in and disposal obligations are improved, it is expected to prevent situations where homebuyers are forced to move into newly purchased homes prematurely to fulfill the six-month disposal and move-in agreement.

Additionally, the loan limit for mortgage loans aimed at living stabilization funds will be expanded from the existing 100 million KRW to 200 million KRW. The plan is to first relax it to 200 million KRW this year and consider further easing based on household debt and real estate market conditions.

Regarding jeonse (long-term lease) loans, Vice Chairman Kim explained, "Even if the market price rises after receiving a jeonse loan, causing the borrower to become a high-priced home owner, we will allow the extension of the jeonse loan guarantee until the tenant moves out," adding, "Currently, if the price of the home owned after receiving a jeonse loan rises and becomes a high-priced home where jeonse loans are prohibited, the jeonse loan is recalled, which is unreasonable, and we will completely resolve this issue."

Currently, those who own a high-priced home exceeding 900 million KRW are prohibited from obtaining jeonse loan guarantees to reside in another home.

Furthermore, support for jeonse loans will be strengthened for low-income tenants whose renewal contracts expire within the next year by expanding the deposit and loan limits of the Buttimgok Jeonse Loan. In the metropolitan area, the deposit limit will be increased from 300 million KRW to 450 million KRW, and the loan limit from 120 million KRW to 180 million KRW.

The existing policy to improve various loan regulations from the third quarter to restore the "housing ladder" and support livelihoods was also reaffirmed. Vice Chairman Kim said, "To ease the repayment burden of the Bogeumjari Loan for youth and newlyweds, we will introduce ultra-long-term mortgages with a 50-year maturity and implement graduated repayment methods for the 40-year maturity Bogeumjari Loan."

Regarding improvements to the housing pension, she emphasized, "We will relax the housing price requirement for the preferential housing pension for low-income groups from 150 million KRW to 200 million KRW to expand the eligible subscribers and establish procedures to refund the initial guarantee fee."

Vice Chairman Kim added, "The announced measures to stabilize the rental market today will be promptly implemented through regulatory amendments along with the easing of the loan-to-value ratio (LTV) to 80% for first-time home mortgage loans and the expansion of future income in the debt service ratio (DSR) for youth, which were announced in the economic policy direction on the 16th."

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