프린터

About Korean Home Pension

What is the Korean Home Pension (Reverse Mortgage)?

  • Korean Home Pension is a government-guaranteed reverse mortgage program for senior citizens, who own a house but do not have adequate cash flow to support livelihood in their advanced years. The program allows eligible elderly to take out a reverse mortgage with their houses as collateral and receive a lifetime monthly payment.
  • Benefits of Korean Home Pension
     Benefits of Korean Home Pension 
    Lifetime Payment Both borrowers and spouses are guaranteed to receive lifetime monthly payments while residing in their homes throughout the remaining years of their lives.
    Government Guarantee Backed by a government guarantee, there is no risk of the monthly payments discontinuation.
    Low Interest Rate Either of 1) a 3-month adjustable CD rate + 1.1% or 2) a 6-month adjustable COFIX rate + 0.85% can be opted, lower than the interest rate of any other type of forwarded mortgage loans.
    Low Initial Cost Registration tax, local education tax, special tax for rural development, obligatory purchase of National Housing Bonds are exempted.
    Tax Benefit For houses with value of KRW500 M or less, 25% of the property tax reduction applies. For houses with value more than KRW 500M, tax deduction amount equals to 25% of property tax applied for houses with KRW500 M value.

Eligibility

  • Age Requirement
    • 55 years old or older homeowners or spouses as of property collateralization date.
      (ex 1: Homeowner(58), spouse(53) -> eligible, ex 2: Homeowner(53), spouse(58) -> eligible)
  • Number of Properties Owned (by both borrowers and their spouses)
    • Those who own a house or houses, of which the total declared value is KRW1200 M or less.

      ※ In case of owning two houses of the sum with declared value exceeding KRW1200 M
      → The applicant may subscribe to the program on the condition of signing a pledge to sell or hand over ownership of the non-residing property within 3 years from pension subscription.

House Eligibility

  • "House" prescribed in the Korean Housing Act
    • Detached (single) Houses, Multi-unit Houses (multi-plex houses, row houses, or apartments), Multi-use dwellings (only where the housing area comprises more than half of the total area)
  • "Elderly Welfare Houses" prescribed in Welfare of the Aged Act
  • "Officetels" (studio apartments) prescribed in the Enforcement Decree of the Korean Housing Act (those used for residential purposes only)

    All of the following criteria shall be met to be regarded as being for “Residential Purpose”

    1. The addresses on the applicants or spouses resident registration match the addresses of the collateralized house.
    2. The applicants or spouses actually reside in the property.
    3. Essential residential facilities, such as a private kitchen, a bathroom, or a toilet, are installed in the property.
    4. The collateral is listed as a house on the property tax bill and levied as a house.
  • Declared value less or equal to KRW 1200M

    Applicants may subscribe to the home pension program under the condition of expunging all mortgage clauses and lease contracts with the lump sum withdrawal from the Home Pension.

  • Declared Value Appraisal Methods
    • Official declared value as announced by the Act on the Public Announcement of Real Estate Values (if there is no declared value available, official housing prices announced by the Minister of the Interior and Safety or the value assessed by local tax laws applied) → Korea Real Estate Board online market prices → KB online market prices → Appraised value by a contracted appraisal agency
  • Houses Ineligible for the Home Pension Program
    • Officetels* (Studio apartment), commercial-residential buildings, commercial buildings, sales and business facilities, fields and paddies, etc.
    • * With an exception of officetels used for residential purposes

    • Encumbrances as indicated on a certified copy of the Real Estate Registry (application for an auction, attachment, preliminary attachment, injunction, provisional registration, etc.)
  • How to join the Home Pension program when any mortgage, entitlement to Jeonse (returnable lump-sum rental deposit), or a lease agreement exists
    • Customer needs to terminate any existing mortgage and lease agreements using a lump-sum withdrawal in order to use the Home Pension.
    • Lump-sum withdrawals are permitted up to 50% of the total loan limit.

House price appraisal method for monthly payment

  • Korea Real Estate Board online market prices → KB online market prices → Official declared value announced by the Act on the Public Announcement of Real Estate Values (if there is no declared value available, official housing prices announced by the Minister of the Interior and Safety or the value assessed by local tax laws applies) → Appraised value by a contracted appraisal agency