For first-time homebuyers, it is now possible to borrow up to 80% of the property value when purchasing a house.
Originally, the regulations were as follows: for first-time homebuyers purchasing a house worth less than 900 million won in speculative overheated zones, the loan-to-value (LTV) ratio was set at 50-60%, while for homes under 800 million won in adjustment-targeted areas, the LTV ratio was 60-70%. The maximum loan limit was 400 million won.
The regulations have changed, allowing an LTV ratio of 80% to be applied regardless of the area or property price. The maximum loan limit has been increased to 600 million won.
Home Loan Regulations
For those purchasing a new home as a first-time homeowner, the regulations have been eased. Previously, if a first-time homeowner took out a mortgage in a regulated area, they were required to sell their previous home within 6 months and move into the new home. Failure to move in within 6 months resulted in the loan being recalled, and the individual was barred from housing-related loans for 3 years.
The regulations have changed, allowing homeowners in the same situation to sell their existing home within 2 years. The obligation to move into the new home has been lifted. If unforeseen circumstances such as natural disasters, industrial accidents, or the area of the existing home being designated for public redevelopment make it difficult to sell the home within 2 years, the deadline for selling can be extended with the approval of financial institutions. This change applies to those who received housing collateral loans starting from August 1, 2022.
The limit for 'Life Stability Funds' secured by an owned home as collateral has increased. For individuals who own a home and take out a loan using their home as collateral for essential living expenses, the limit has increased from 100 million to 200 million won. The limit for emergency livelihood-purpose housing collateral loans not included in the debt service ratio regulations has also increased from 100 million to 150 million won.
Loans for Homes Exceeding 1.5 Billion Won
For homes expected to have a value exceeding 1.5 billion won after completion, obtaining interim occupancy loans or progress payment loans was not easy. This was because loans secured by housing collateral were entirely prohibited when the property value exceeded 1.5 billion won. This prohibition made it difficult for banks to receive payments for interim occupancy and progress payment loans.
The regulations have been changed to partially allow post-construction loans for homes valued over 1.5 billion won. This allowance applies only to the outstanding balance of loans not repaid in the case of interim occupancy and progress payment loans. For instance, if the pre-sale price of an apartment is 1.4 billion won, and an individual borrows 800 million won for interim occupancy and progress payments, repaying 50 million won, the remaining loan amount of 750 million won is eligible for post-construction loans.
These regulatory changes aim to stimulate the housing market and ease the financial burden on homebuyers, making it more accessible for individuals to own homes and manage their financial situations effectively.