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HF KOREA HOUSING FINANCE CORPORATION

Home Pension (Reverse Mortgage)

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Overview

1 What is Home Pension (Reverse Mortgage)? Open
  • Home Pension (Reverse Mortgage) is a government guaranteed reverse mortgage program for elderly Koreans, who own property but do not have adequate cash flow for elderly years, to receive monthly RM payments by collateralizing their house.
  • Benefits of Home Pension

    Benefits of Home Pension
    lifetime residence and
    lifetime payment
    Both the borrower and spouse are guaranteed to reside in their home and receive payments throughout the rest of their lives.
    Government guarantee Since the program is guaranteed by the Government, there is no risk of the monthly payments being discontinued.
    Low interest rate Home Pension's applied interest rates are BOTH 1) 3-month adjustable CD rate + 1.1% and 2) 6-month adjustable COFIX rate + 0.85% which are lower than the interest rate of any other regularly forwarded mortgage loan
    Low initial cost registration tax, local education tax, special tax for rural development, obligatory purchase of National Housing Bonds are exempted.
    Tax benefit 25% of property tax is reduced. (If the property value exceeds
    KRW 500million, the amount of tax reduction is limited to 25% of the property tax based on KRW 500milion.
2 Eligibility Open
  • Age requirement
    • The Homeowner or spouse must be 55 years old or older at the date of property collateralize.
      (EX1: Homeowner(58y), spouse(53y) -> eligible, EX2: Homeowner(53y), spouse(58Y) -> eligible)
  • Number of property owned(for both borrower and his/her spouse)
    • Those who own a house or houses, of which total declared value is KRW 900million or less.
      1. ※ In case an applicant owns two houses, of which the sum of declared value exceeds KRW 900million
        → The applicant may subscribe to the program, should he/she sign a pledge to sell or hand over the ownership of the non-residing property within 3 years from pension subscription.
3 House Eligibility Open
  • "House" prescribed in Korean Housing Act
    • Detached(single) House, Multi-unit House(multi-plex house, row house, apartment), Multi-use dwelling(only if the housing area consists more than half of total area)
  • "Elderly welfare house" prescribed in Welfare of the Aged Act
  • "Officetels"(studio apartments) prescribed in the Enforcement Decree of the Korean Housing Act (Those of residential purpose only.)
    1. ※ All of the following criteria shall be met to be regarded as of “Residential Purpose”
    2. 1. The address of the applicant’s or spouse’s resident registration matches address of the collateral house.
    3. 2. The applicant or spouse is actually residing in the property.
    4. 3. Essential residential facilities, such as private kitchen, bathroom, or toilet, are installed in the property.
    5. 4. The collateral is listed as a house in the property tax bill and levied as a house.
  • Declared value less or equal to KRW900 million
    1. ※ Applicant can still join the program by terminating all mortgage clauses and lease contract using the lump sum withdrawal of Home Pension.
  • Appraisal method for the declared value
    • 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 accessed by local tax law are applied) → Korea Real Estate Board online market prices → Kookmin Bank online market prices → Appraised value by a contracted appraisal agency
  • Cases not eligible for the Home Pension program
    • Officetels*(Studio apartment), commercial-residential buildings, commercial buildings, sales and business facilities, fields and Paddy fields, etc.
    • * except officetels of residential purpose

    • Encumbrances indicated on a certified copy of the real estate register (application for an auction, attachment, preliminary attachment, injunction, provisional registration, etc.)
  • How to join the Home Pension program when there is exists any mortgage, entitlement to jeonse (returnable lump-sum rental deposit), or a lease agreement
    • Customer needs to terminate any existing mortage and lease agreements using lump-sum withdrawal in order to use Home Pension.
    • Lump-sum withdrawals are permitted up to 50% of the total loan limit.
4 House Price appraisal method for Monthly payment Open
  • Korea Real Estate Board online market prices → Kookmin Bank 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 accessed by local tax law are applied) → Appraised value by a contracted appraisal agency