Loan Applications for Safe Conversion Start from the 15th... Final Recipients Selected Based on Housing Prices

Application for 25 Trillion Won Anshim Conversion Loan Open from 15th to Next Month 17th
If Exceeding 25 Trillion Won, Final Supporters Selected by Lowest Housing Price
Targeting Single-Homeowners with Combined Spousal Income Below 70 Million Won...Houses Priced Under 400 Million Won
Interest Rate Reduced by 45bp Compared to Bogeumjari Loan, Applied at 3.8~4.0%

[Asia Economy Reporter Song Hwajeong] Starting from the 15th, applications will open for the preferential Safe Conversion Loan, which allows low-income and actual demand borrowers holding variable or quasi-fixed rate mortgage loans to switch to long-term, fixed-rate, installment repayment products with low interest rates. Final beneficiaries will be selected based on the lowest housing prices rather than on a first-come, first-served basis.

On the 14th, the Financial Services Commission announced that applications and registrations for the Safe Conversion Loan for refinancing actual demand borrowers holding variable or quasi-fixed rate (mixed rates that convert to variable rates after a certain period) mortgage loans will begin on the 15th.

The eligible loans are variable or quasi-fixed rate mortgage loans handled by first-tier and second-tier financial institutions up to August 16, before prior notice. Loans with maturities of 5 years or more that have fully fixed interest rates until maturity, as well as policy mortgages (Bogeumjari Loan, Eligible Loan, Didimdol Loan), are excluded.

Eligible applicants are one-homeowners with a combined household income of 70 million KRW or less, and the home must be priced at 400 million KRW or less. When applying, the market price of the home (KB market price, Korea Real Estate Board market price) will be primarily used, and if no market price is available, the official assessed price and realization rate will be utilized.

When refinancing with the Safe Conversion Loan, the early repayment fee (usually 1.2%, sliding scale within 3 years) charged by financial institutions upon cancellation of the existing mortgage loan will be waived. The loan limit is up to 250 million KRW within the existing loan amount. A loan-to-value ratio (LTV) of 70% and a debt-to-income ratio (DTI) of 60% will be uniformly applied, but the debt service ratio (DSR) will not be applied. The maturities available are 10, 15, 20, and 30 years. Interest rates will be reduced by 45 basis points (1bp=0.01%) compared to the Bogeumjari Loan rates, applying 3.8?4.0%. Low-income youth (income 60 million KRW or less, age 39 or younger) will receive a 55bp reduction, applying 3.7?3.9%.

The interest rate is fixed until maturity, so even if rates rise in the future, the principal and interest payments remain the same.

Applications and registrations will be accepted in two rounds from the 15th to the 17th of the following month, prioritized by housing price, with sequential screening after selecting beneficiaries. The first round, from the 15th to the 30th, accepts applications for homes priced up to 300 million KRW; the second round, from October 6 to 17, accepts applications for homes priced up to 400 million KRW. Additionally, application dates differ based on the last digit of the birth year, and non-day-of-the-week restrictions will also be operated.

If the cumulative application volume exceeds 25 trillion KRW per round, final beneficiaries will be selected based on the lowest housing prices rather than on a first-come, first-served basis. If the first round’s application volume exceeds 25 trillion KRW, final beneficiaries will be selected without a second round. If the application volume is below 25 trillion KRW, additional applications will be accepted by raising the housing price limit.

Application and registration locations differ depending on the existing mortgage loan financial institution. Borrowers with mortgages from the six major commercial banks (Kookmin, Shinhan, Nonghyup, Woori, Hana, Industrial Bank of Korea) can apply through the bank’s branches or mobile applications. Borrowers with mortgages from other banks and second-tier financial institutions (savings banks, mutual finance, insurance companies, etc.) must apply through the Korea Housing Finance Corporation.

Loans are expected to be completed sequentially within an average of two months after the application date, and borrowers will receive the Safe Conversion Loan interest rate from the date the loan is refinanced (expected between October and December).

Loan disbursement will be conducted through branch visits. For applications and screenings at Kookmin, Shinhan, Nonghyup, Woori, Hana, and Industrial Bank of Korea, disbursement will be done at the existing loan bank’s branch. For applications and screenings through the Korea Housing Finance Corporation, disbursement will be conducted at branches of 13 commercial and regional banks (Kookmin, Shinhan, Nonghyup, Woori, Hana, Industrial Bank of Korea, Busan, Jeonbuk, Gwangju, Gyeongnam, Suhyup, Jeju, Daegu banks).

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