[Q&A] Apply for Safe Conversion Loan from the 15th... For Single Homeowners with Property Under 400 Million Won

[Asia Economy Reporter Song Hwajeong] Applications and registrations for the Safe Conversion Loan, designed to alleviate excessive burdens on low-income and actual demand borrowers during the interest rate hike period, will begin on the 15th.

On the 14th, the Financial Services Commission summarized the application and registration methods for the Safe Conversion Loan in a Q&A format.

▲ Until when are housing mortgage loans eligible for application?

= Variable interest rate and quasi-fixed interest rate housing mortgage loans executed by August 16 of this year are eligible. Loans executed after the detailed implementation plan for this Safe Conversion Loan is announced are excluded.

▲ For existing loans that have been assumed by debt transfer or had their maturity extended (such as extensions after the initial maturity), which date is considered the loan date?

= The original loan date is the basis, and loans executed by August 16 of this year are eligible for application.

▲ What types of mortgage loan interest rates are eligible for application?

= All loans except those with fixed interest rates throughout the term (5 years or more) are eligible. Repayment methods such as lump-sum or installment repayment do not matter.

▲ If using Didimdol Loan or Bogeumjari Loan together with mortgage loans from other financial institutions, is it possible to apply for the Safe Conversion Loan?

= It is possible to handle as a subordinate lien only if the senior mortgage lien-related loan is a Housing and Urban Fund loan (such as Didimdol Loan) or Korea Housing Finance Corporation’s Bogeumjari Loan. The Safe Conversion Loan principle requires a first-priority mortgage lien. For refinance loans excluding Housing and Urban Fund loans and Bogeumjari Loan, apply for the Safe Conversion Loan at the financial institution with the highest priority lien.

▲ If the existing loan was taken out by the spouse, can the applicant apply for the Safe Conversion Loan?

= The debtor and spouse of the existing loan are considered the same person, so the applicant can apply for the Safe Conversion Loan to refinance the spouse’s existing loan. However, if the couple is no longer married due to divorce or other reasons at the time of application, the application is not possible.

▲ Are mortgage loans from secondary financial institutions eligible for the Safe Conversion Loan?

= Mortgage loans executed through secondary financial institutions such as insurance companies, mutual finance, and savings banks are also eligible for the Safe Conversion Loan. However, in this case, applications can only be made through the Korea Housing Finance Corporation’s website or mobile app.

▲ Can multiple debtors with mortgage loans from several financial institutions apply for the Safe Conversion Loan?

= If all existing multiple debts meet the Safe Conversion Loan eligibility criteria (loan timing, interest rate type, etc.) and can be refinanced into a single Safe Conversion Loan, application is possible. The application and registration location varies depending on the financial institution holding the first-priority mortgage lien.

▲ Are residential officetels eligible for application?

= Officetels are not considered housing under Article 2, Clause 1 of the Housing Act, so the Safe Conversion Loan cannot be used.

▲ If the borrower does not reside in the property and a tenant lives there, can the Safe Conversion Loan still be applied for?

= Applications are possible even if a tenant resides in the property. However, if a prior right such as a jeonse right (long-term lease right) is established that takes precedence over this Safe Conversion Loan, the mortgage value may be reduced by the amount of the established right (loan limit reduction).

▲ Are interim payment loans or balance payment loans within group loans eligible for application?

= Interim payment loans are not eligible, but balance payment loans for buildings with completed registration can be applied for if they meet the Safe Conversion Loan eligibility criteria (execution timing, etc.). Interim payment loans, which are loans taken during construction for the purpose of purchasing new housing, are not eligible as they cannot have mortgage liens established.

▲ If the housing price exceeds 400 million KRW after conversion to the Safe Conversion Loan, is there an obligation to repay?

= The housing price for the Safe Conversion Loan is determined based on the application date, and even if the housing price rises later (exceeding 400 million KRW), there is no repayment obligation.

▲ How is income screening handled if the applicant is currently unemployed due to business closure or job loss, or is on leave?

= In cases of business closure or job loss, income can be estimated based on health insurance premium payment records or national pension premium payments for loan screening. For those on leave, screening is based on the annual income prior to the leave.

▲ Does applying guarantee the use of the Safe Conversion Loan?

= Final beneficiaries will be selected in order of lowest housing price, so if applications exceed 25 trillion KRW, some applicants may not be selected. After each application period ends, final beneficiaries will be selected and screened considering the supply scale (25 trillion KRW).

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