HF Construction Reduces Repayment Burden for Financial Consumers... Early Repayment Fee Rate Cut by 0.3%

Korea Housing Finance Corporation logo.

[Asia Economy Yeongnam Reporting Headquarters Reporter Hwang Du-yeol] Korea Housing Finance Corporation (HF) will lower the early repayment fee rate from the current maximum of 1.2% to 0.9% starting from the 1st of next month and introduce a graduated repayment method for the 40-year maturity Bogeumjari Loan.

This policy implementation follows the ‘New Government Household Loan Management Direction and Gradual Normalization of Regulations’ announced by the Financial Services Commission on the 16th.

To alleviate the initial repayment burden for low-income youth, a graduated repayment method will be introduced for the 40-year maturity Bogeumjari Loan.

The graduated repayment method features lower repayment amounts initially, with principal repayments increasing over time, and is available to customers aged 39 or younger who are expected to have increasing income in the future.

For example, with a loan maturity of 40 years, a loan amount of 300 million KRW, and an interest rate of 4.6%, using the equal principal and interest repayment method results in a monthly repayment of about 1.37 million KRW, which remains the same until maturity.

Using the graduated repayment method, the first repayment amount is about 1.17 million KRW, which is 200,000 KRW less than the equal principal and interest repayment method, and the 60th repayment amount is about 1.24 million KRW, which is 130,000 KRW less.

Additionally, from the 1st of next month, for Bogeumjari Loans and qualified loans repaid early within three years from the loan date, the early repayment fee rate applied to the principal will be gradually reduced based on elapsed days, lowering the maximum rate from 1.2% to 0.9%, a 0.3 percentage point decrease.

According to the policy, customers using policy mortgage loans such as Bogeumjari Loans and qualified loans can save up to 900,000 KRW in costs when repaying a loan principal of 300 million KRW early.

HF Corporation plans to end the 70% reduction in early repayment fees for Bogeumjari Loans, which has been in effect since October last year, by the end of June. As of the end of April, the amount of support for early repayment fee reductions is approximately 3.1 billion KRW.

President Choi Jun-woo stated, “This measure actively responds to the government’s livelihood stabilization policy direction to ease the financial burden on low-income and real demand borrowers,” and added, “We will swiftly promote various institutional improvements to reduce the repayment burden on financial consumers during the interest rate hike period so that the public can feel the effects.”

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