New 5 Billion Won 40-Year Loan and Special Supply for Unmarried Applicants Established

Looking into the Housing Stability Plan for Youth and Common People

When purchasing a house priced at 600 million KRW

Initial burden reduced by 100 million KRW · Interest savings of 370 million KRW

Reducing the proportion of first-time homebuyer and newlywed special supply increases young people's chances of winning housing subscriptions

[Asia Economy Reporter Kim Min-young] The government's '500,000 Housing Supply Plan' for young people and middle-aged homeless households not only focuses on expanding supply but also includes concrete financial support measures for actual home ownership. The public and private housing subscription systems, which have been criticized for being operated mainly for married couples and excluding unmarried youth, have also been reformed to increase the chances of winning housing subscriptions for young people and homeless 4050 generations.

◇ Loans up to 500 million KRW, 1.9% interest rate with a 40-year term = According to the '500,000 Public Housing Supply Plan for Youth and Low-Income Housing Stability' announced by the Ministry of Land, Infrastructure and Transport on the 26th, among the three models presented by the government, the Sharing Type offers loans up to 500 million KRW with a 40-year term at a low fixed interest rate of 1.9~3.0%. The interest rate announced by the Korea Federation of Banks is 4.64%. Using the exclusive mortgage for the Sharing Type, borrowers can significantly reduce the initial lump sum burden and interest compared to purchasing an existing house with a commercial bank loan. For example, assuming the purchase of a house priced at 600 million KRW, the initial burden is estimated to be reduced by up to 100 million KRW, and the total interest burden by up to 370 million KRW.

The Selective Type supports exclusive jeonse loans at a minimum fixed interest rate of 1.7% for up to 80% of the deposit at the time of move-in. When choosing to purchase after 6 years, a fixed low-interest mortgage loan of up to 500 million KRW with a 40-year term will be supported. The applied interest rate is the same as the Sharing Type. During the lease period, the interest burden on the jeonse loan is reduced, and at the time of purchase after 6 years, the interest burden is expected to decrease to a level similar to the Sharing Type. The Ministry of Land, Infrastructure and Transport estimates that for a house with a jeonse deposit market price of 300 million KRW at move-in, the interest burden will be reduced by up to 50 million KRW.

For the General Type, the existing Didimdol loan fund will be supported, but preferential treatment will be applied to loan limits and interest rates for young people. For newlyweds, the loan limit will increase from the existing 270 million KRW to 400 million KRW, and for first-time homebuyers, from 150 million KRW to 200 million KRW.

◇ Special supply newly established for unmarried youth · Lottery system introduced for small and medium-sized units = The public housing subscription system will also be reformed. Special supply has so far been operated mainly for married couples such as newlyweds and first-time homebuyers, resulting in relatively fewer subscription opportunities for unmarried youth.

Accordingly, the Ministry of Land, Infrastructure and Transport will newly establish special supply for unmarried youth in the newly introduced Selective and Sharing Types and introduce a lottery system for the General Type. In addition, plans to prioritize young people with longer employment periods and limit subscription opportunities if parental assets exceed a certain level will be prepared within the year.

Furthermore, for the relatively financially capable homeless 4050 generation, the General Type will expand the general supply ratio from 15% to 30%, and the Selective Type will allocate 30% of special supply to multi-child families and elderly parents.

Considering demand by household type, the private housing subscription system will also be improved. So far, small and medium-sized units under 85㎡ in speculative overheated districts have been supplied 100% by a point system, resulting in fewer winning chances for young people with fewer dependents and shorter periods of homelessness. Therefore, a lottery system will be introduced for small and medium-sized units (60㎡ or less, over 60㎡ up to 85㎡) with high demand from 1-2 person young households in speculative overheated districts.

Additionally, the point system will be expanded for large units (over 85㎡) with high demand from 3-4 person middle-aged households. To increase young people's chances of winning, the proportion of special supply for first-time homebuyers and newlyweds related to young people will be slightly reduced to expand the general supply volume.

Regarding preferential treatment for military service, since a new housing supply model has been introduced this time, specific measures will be presented after analyzing the results of the preliminary subscription at the end of the year. The Ministry of Land, Infrastructure and Transport plans to consider awarding points based on military service and subscription preferential conditions (military service period, work experience, marriage, child-rearing, etc.) or integrating military service period with other conditions such as residence period and work period.

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