A person surnamed Lee in their 30s is busy looking for a housing collateral loan that offers a slightly higher limit to pay the balance on an apartment purchase two months later. Whenever there is a chance, they access online communities related to real estate and loans to thoroughly review loan experiences. Lee learned that the mortgage credit insurance (MCI) and mortgage credit guarantee (MCG) are restricted at their main bank, NongHyup Bank, leading to a decrease in the loan limit by about 50 million won, and began searching for another bank. Through a loan broker, Lee was introduced to a bank where MCI insurance can be subscribed and applied for the loan.
Since the implementation of the household loan regulations on June 27, the number of financial consumers who are searching actively for places with high loan limits has increased. Although all circumvention routes for loans have been blocked due to stringent regulations, they are struggling to find financial institutions that have relatively loosened their restrictions.
MCI and MCG are insurances to subscribe to simultaneously with housing loans, and without insurance, only the amount excluding a small rental deposit can be borrowed, reducing the loan limit. For apartments in Seoul, there is an effect of reducing the loan limit by 55 million won, while in rural areas, it is 25 million won. NongHyup Bank has been limiting subscriptions to MCI and MCG for face-to-face and non-face-to-face applications since the end of June. Other banks still allow subscriptions to MCI and MCG, but some banks are reportedly considering imposing restrictions.
A loan broker noted, "Recently, the most inquiries have been about Jeonse tenant removal loans." He explained, "Applying the elapsed regulation allows loan maturities to extend up to 40 years, which increases the loan limits." The Jeonse tenant removal loan is a loan that landlords take out to return rental deposits to existing tenants and falls under housing loans. Though the limit for Jeonse tenant removal loans is capped at 100 million won, loans exceeding 100 million won can be obtained if the conditions such as signing contracts are met before the regulatory announcement.
By extending the loan term, the annual principal and interest repayment amount decreases, which ultimately increases the loan limit. After the June 27 regulations, the maximum maturity for housing loans in the metropolitan area has been restricted to 30 years.
The burden of loan repayments is expected to worsen further. This is due to the government reducing the total household loan target for the second half of the year to 50%. Banks are limiting new housing loan handling limits through loan brokers and are intensifying restrictions on Jeonse loans, moving into self-management.