Newly Enrolled Small Business Owners in Housing Pension Can Use Individual Withdrawals Upon Closure

Individual Withdrawals from Reverse Mortgage
Can Be Used to Pay Contributions During Home Reconstruction

If a small business owner or their spouse wishes to close their business, they will be able to use individual withdrawals from the reverse mortgage to repay small business loans.

Additionally, if the collateral home is subject to reconstruction or similar projects while using the reverse mortgage, individual withdrawals can be used to pay the required contributions.

Korea Housing Finance Corporation (President Kim Kyunghwan) held a meeting with commercial bank representatives to review preparations for the upcoming improvements to the reverse mortgage system for small business support, which are scheduled to be implemented in March.

Korea Housing Finance Corporation Briefing Session. Provided by Korea Housing Finance Corporation

With this system improvement, small business owners or their spouses who wish to close their business can join the reverse mortgage program and use individual withdrawals to repay small business loans.

While the withdrawal limit for the general reverse mortgage is 50% of the loan limit, for the purpose of repaying small business loans, the withdrawal limit can be set up to 90% of the loan limit, making it possible to secure a larger lump sum.

Existing subscribers can also use individual withdrawals within 50% of the loan limit to repay small business loans.

Furthermore, if a reverse mortgage customer’s collateral home becomes subject to a maintenance project such as reconstruction, redevelopment, or remodeling and they need to pay a contribution, they can use individual withdrawals to do so. Since the individual withdrawal can be up to 70% of the loan limit, it reduces the financial burden for participants in such projects.

An official from the corporation stated, “This briefing session was an opportunity to discuss the purpose of the reverse mortgage system with commercial bank representatives and to share the details of the improvements for the swift establishment of the system,” adding, “We will continue to work closely and communicate with financial institutions to ensure smooth implementation of the policy.”

The Financial Services Commission completed the revision of the Enforcement Decree of the Korea Housing Finance Corporation Act on February 18 to improve the reverse mortgage system for small business owners and participants in maintenance projects such as reconstruction.