[Real Estate Finance] What to Watch Out for When Trading Quick-Sale Properties with Special BoGeumjari Loan?

Check KB Prices and Loan Execution Dates

[Asia Economy Reporter Kwak Minjae] A special BoGumJaRi loan, which allows borrowers to secure up to 500 million KRW with a 900 million KRW house as collateral through a long-term fixed-rate installment loan regardless of income during a period of rising interest rates, will be launched at the end of this month. Compared to the existing Safe Conversion Loan, the eligible housing has increased and the benefits have expanded. As major apartment markets in Seoul and other areas face a decline in housing prices and a flood of urgent sale properties, real demand buyers aiming to purchase their own homes are showing keen interest. Together with experts, we have summarized key points to be cautious about when using the special BoGumJaRi loan to trade urgent sale properties.

[Image source=Yonhap News]

Recently, inquiries for purchases have increased mainly in areas with low-priced apartments in the Seoul apartment market. This is because real demand buyers are emerging who want to secure urgent sale properties priced under 900 million KRW, which is the condition for the special BoGumJaRi loan. This trend is particularly strong in Nowon-gu and Dobong-gu, where the proportion of apartments priced under 900 million KRW is high.

However, caution is needed as rushing to contract based solely on the actual transaction price of urgent sale properties can lead to losses. To qualify for the special BoGumJaRi loan, both the KB appraisal price and the sale price must be under 900 million KRW, but often the KB appraisal price of urgent sale properties exceeds 900 million KRW. For example, even if an urgent sale property is priced at 850 million KRW, if the KB appraisal price is 910 million KRW, the special BoGumJaRi loan cannot be obtained. Go Junseok, CEO of J.Edu Investment Advisory, explained, "If the KB appraisal price exceeds 900 million KRW, there is a risk of losing the deposit due to contract cancellation for failure to pay the balance." He added, "If the interim payment has already been made, it could lead to legal cancellation and the seller may claim damages, so caution is necessary."

It should also be considered that the special BoGumJaRi loan can only be executed 30 days after the loan application date. If the balance must be paid urgently within a month to purchase an urgent sale property, the special BoGumJaRi loan cannot be used. CEO Go said, "Urgent sale properties are usually listed cheaply by sellers aiming for a quick sale, so the balance is often paid within a month," and warned, "If time is tight, it may be difficult to use the special BoGumJaRi loan."

Not only zero-homeowners but also one-homeowners can use the special BoGumJaRi loan. Temporary two-homeowners for replacement acquisition can use the special BoGumJaRi loan on the condition that the existing home is disposed of within two years. However, since the condition to maintain one home during the loan period is strictly applied, those planning to own two or more homes by purchasing additional properties should be cautious about using the special BoGumJaRi loan. According to the Financial Services Commission, if an additional home is acquired, the borrower must dispose of the additional home or repay the loan within six months from the confirmation date. Failure to dispose within this period results in loss of benefit of term and disqualification from using the BoGumJaRi loan for three years.

CEO Go advised, "Since the special BoGumJaRi loan is originally a policy financial product for zero-homeowners, penalties are imposed if the existing home is not disposed of after acquiring additional homes." He added, "When the market is good, it is easy to dispose of homes within the deadline, but when the market is bad, it may be difficult to dispose of homes within the deadline, so caution is needed when using the special BoGumJaRi loan."

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