Home Pension initial guarantee fee becomes partly refundable for termination within 3 years

- The new policy will apply from Dec. 12, 

the refundable amount varies by loan period.

The Korea Housing Finance Corporation (HF) (CEO Choi, Jun-Woo) announced on Dec. 7 that the refund policy for the initial guarantee fee for the home pension (reverse mortgage) product will change to allow the borrowers of the loan product to receive a partial refund on their fee if they rescind their loan within the three-year period. The new policy will commence on Dec. 12.  

In principle, the initial guarantee fee was not subject to refund until now. However, with the recent change beginning on Dec. 12, customers who cancel the home pension plan within three years from the first origination date of the loan are entitled to get a refund in part. The borrowers who took the loan less than three years before can now apply for the refund. The new borrowers will be also eligible to get a refund if they cancel the loan plan within three years.

 ※ The entire amount of the initial guarantee fee is refundable if the borrower rescinds it or is demised within 30 days after the loan’s origination date. 

The refundable amount reduces as time passes after the execution of the loan. The calculation is based on the number of days the borrowers used the loan product and the size of the initial guarantee fee paid by the borrowers. 

Note: The following should be noted in case of canceling the loan before maturity:  ？only part of the initial guarantee fee is refundable, ？ the customers are restricted from taking out the same loan product for the same housfont-si��T저 2eetter-spacing: -0.39024px; word-spacing: 1.3008px;">

Per the change, the interest rate for “U-Bogeumjari Loan”, for which borrowers can apply via HF’s website (www.hf.go.kr), will rise to 4.75% p.a. (10Y) and to 5.05% p.a. (50Y). The rate for “Save e-Bogeumjari Loan”, for which borrowers apply via the online channel by signing in an electronic agreement form, will rise to 4.65% p.a. (10Y) and to 4.95% p.a. (50Y); 0.1%p lower than the U-Bogeumjari Loan.

Despite the rapidly rising market rate, the HF has not adjusted interest rates for Bogeumjari Loans since it lowered the rate by 0.35%p on Aug. 17 2022, to reduce the burden on low-income households and to aid end-users in managing their housing expenses.  

According to a corporation official, raising the IR for Bogeumjari Loans is unavoidabledueI
H|{� X� d increase in BOK’s base rate and MBS issuance rate. The official also explained that―as a temporary relief and to minimize the burden on customers―borrowers who apply for the loan plan by Dec. 19 will be able to take out the loan at the previous rate, even if their loan is scheduled to be executed after a maximum of 90 days (previously 70 days) from their application. 

？ BOK Base rate : (Aug. 25) 0.25%p↑, (Oct. 12) 0.5%p↑, (Nov. 24) 0.25%p↑

？ MBS Issuance Rate : (Aug. 23) 4.12% → (Nov. 18) 5.41%

Meanwhile, the IR for Relief Refinance Loan will remain at 3.7%-4.0% p.a. by the end of the year.