More people to have benefits of low-interest mortgage loan

The mortgage program, in which the government and a house owner share both benefits and losses from housing sale, has gained much popularity from people who do not own a house by providing a long-term loan at an annual interest rate of less than 2 percent. This program will be expanded to 15,000 households from next Monday. In addition, a “secure jeonse (a lump sum rental deposit) loan,” which provides a house rental loan at a low interest rate and eliminates the risk of losing a security deposit, will be launched in January next year. In the meantime, the Park Geun-hye administration will reduce the supply of “happy housing,” a key to its rental housing policy, to 140,000 from 200,000 and expand the scope of applicable lands from railroad sites to public housing lands and industrial complexes.

The Ministry of Land, Infrastructure and Transport announced follow-up measures of the April 1 and August 28 real estate stimulus plans at a meeting of economy-related ministers Tuesday. Although the administration introduced comprehensive policies covering tax benefits, finance, supply and systematic measures in order to simulate the housing market twice this year, their impacts have been limited due to delays in passing the related key bills, such as the permanent reduction of realty acquisition tax and abolition of transfer income tax for owners of multiple houses, in the National Assembly. As a result, the government had to come up with such additional measures.

The mortgage program, in which a house owner and a financial organization (National Housing Fund) shares benefits or losses from housing sale, will kick off soon in earnest. This program with a total of about two trillion won (two billion dollars) will be open to 15,000 people from next Monday and receive applications in order of arrival. If households with the aggregate annual income of 70 million won (65,975 dollars) or lower purchase their first apartment (except for newly-built apartments) with a net area of 85 square meters or less and a value of not more than 600 million won (564,600,000 dollars), they are eligible to apply for this program.

“Policy mortgages,” such as loans sponsored by the National Housing Fund for low incomers and first-time home buyers and the “Special Bogeumjari Loan,” a mortgage loan provided by the Korea Housing Finance Corporation, will be consolidated into one to make it easy for applicable people to raise housing funds. This loan will be offered at the lowest interest rates between 2.8 percent and 3.6 percent a year for an expanded group of people with relatively low income and first-time homebuyers.

In addition, the “secure jeonse (a lump sum rental deposit) loan” will provide jeonse funds at the annual interest rate of 3.7 percent than other similar loans offered by commercial banks. This loan also guarantees the return of lump sum deposit after the expiry of an agreed rental period.