HF Raises the Guarantee Limit for Landlords and Young Non-Homeowners

- Up to KRW 200M in security deposit refund loan guarantees for landlords and special jeonse loan guarantees for young non-homeowners 

- This will help landlords with difficulties refunding the security deposit as well as young adults with the burden of housing costs 

HF will raise the maximum amount of the Security Deposit Refund Loan Guarantee to help landlords refund jeonse security deposits. Also, it will increase the upper limit of the Special Jeonse Loan Guarantee for young adults without home ownership. 

Korea Housing Finance Corporation (HF, CEO Choi Joon Woo) revealed on January 25, 2023, that it will raise the maximum amount of the Security Deposit Refund Loan Guarantee and the Special Jeonse Loan Guarantee on the following day. This decision came after the government’s 3rd Real Estate Ministerial Meeting.

HF said, “The maximum amount of the Security Deposit Refund Guarantee* has been increased from KRW 100 million to KRW 200 million, which drives up the upper limit of the guarantee per house from KRW 50 million to KRW 100 million.”

 * The maximum amount of guarantee per person varies depending on that person’s home price, rental guarantee amount, and any senior-secured loan. 

The guarantee is offered to landlords who want to take out a loan from a lender to refund the security deposit to their tenant. The maximum house* price should be KRW 1.2 billion or less. In addition, the loan (guarantee) limit is the smaller of either 30% of the existing security deposit or a separately calculated value** within the range of up to KRW 100 million per house.

 * The home owned by the landlord must have no infringement of rights attached, including foreclosure, provisional disposition, and temporary registration. 

 ** (Home price × 60%) + KRW 50 million – senior-secured loans

The guarantee fee is determined by the guaranteed amount, the guaranteed period, and the guarantee fee rate. The general guarantee fee rate stands at 0.6%, while a 0.1%p rate discount is offered to families with three or more children, newlywed couples, those with low incomes, and other socially underprivileged households. The rate discount does not apply more than one time.

[Illustrative Example: Security Deposit Refund Loan Guarantee ？ (Where the Existing Tenant Moves Out)]

[ Illustrative Example: Security Deposit Refund Loan Guarantee ？ (Where the Existing Lease Contract Is Renewed with the Security Deposit Lower than the Current Deposit Amount)]

The Security Deposit Refund Loan Guarantee is available at any branch of commercial banks. Landlords can apply for it three months before and after the expiration or early termination of their lease agreement.

At the same time, HF is raising the upper limit of the Special Jeonse Loan Guarantee for Young Non-Homeowners from the current KRW 100 million to KRW 200 million. Where the guaranteed amount exceeds KRW 100 million, it adjusts the cap based on the borrower’s ability to repay (considering income, outstanding loan amount, and other factors).

[ Illustrative Example: Special Jeonse Loan Guarantee for Young Non-Homeowners ] 

HF CEO Choi said, “HF hopes that these improvements will help landlords too financially strapped to pay back their security deposits due to the recent drop in jeonse prices and ease the burden of housing costs on young adults, including those who have entered the labor market. We will continue our proactive efforts to relieve the housing cost burden of Korean people in the future.”