Home Pension (Reverse Mortgage)
Overview
More Information
1 Terms of guarantee(For Life) : To the death of both the homeowner and his/her spouse Open
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Reasons for termination of Home Pension
- Death of both the homeowner and his/her spouse
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Loss of ownership of the house
- ※ Including the destruction of the house by fire, natural disaster, reconstruction plan or urban redevelopment projects.
- When ownership of the home and Home Pension obligations are not passed to to the spouse within six months from homeowner’s death.
- Not residing in the house for more than one year.
2 Payment Types & Payment Options Open
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Payment Type
1. Tenure Type- A fixed amount is paid out each month until the death of both the borrower and their spouse
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Withdrawals are allowed within 50% of total loan limit. The remainder will be paid in monthly payments until the termination of the guarantee period
※ Lump-sum withdrawals may be used for any purpose besides purchasing a home (rental), speculation, or spending on any extravagance or entertainment.
- Withdrawals are allowed within 45% of total loan limit. The remainder will be paid in monthly payment during the term period, which the customer chooses. (5% of the total loan limit is paid out to the customer when the payment term ends. This is only for medical and home maintenance spending.
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Payment Options
- Fixed Option: Monthly payment is fixed throughout (Customer's) lifetime
- Two-Phase Option : Larger amount of monthly payments for the first 10 years, then reduced to 70% of the initial monthly payment from 11th year onward.
(based on a house value of KRW300 million and tenure payment option)
| Age of applicant |
Tenure payment (fixed amount) |
Two-Phase payment | ||||
|---|---|---|---|---|---|---|
| Initial year |
After 5 years |
After 10 years |
After 15 years |
After 20 years |
||
| 50 | 347 | 416 | 416 | 291 | 291 | 291 |
| 55 | 460 | 549 | 549 | 384 | 384 | 384 |
| 60 | 623 | 741 | 741 | 518 | 518 | 518 |
| 65 | 752 | 888 | 888 | 622 | 622 | 622 |
| 70 | 922 | 1,078 | 1,078 | 754 | 754 | 754 |
| 75 | 1,150 | 1,327 | 1,327 | 929 | 929 | 929 |
| 80 | 1,468 | 1,658 | 1,658 | 1,160 | 1,160 | 1,160 |
3 Loan interest Rate Open
- The monthly interest rates are both 3 month-adjustable CD rate +1.1% and 6 month-adjustable COFIX rate +0.85% of the loan balance.
- However, The borrowers are not required to directly pay the interest with their monthly payments, instead it will be accumulated to the total loan balance.
4 Guarantee Fee(Initial Guarantee Fee and Annual Guarantee Fee) Open
- Initial guarantee fee : 1.5% of the house price is charged once when the first monthly loan payment is made.
- Annual guarantee fee : 0.75% of the loan balance is charged annually and paid on a monthly basis.
- However, the borrowers do not need to directly pay the guarantee fee with their monthly payments, but is accumulated to the total loan balance.
5 Offering of Collateral : KHFC sets the 1st mortgage claim on the house Open
- A house owned by a third party (children, siblings, etc.) is not eligible as collateral for Home Pension.
- The amount of the mortgage can be set by the borrower at 120% of the total estimated loan balance guaranteed.
6 Loan repayment : Lump sum repayment with the proceeds from selling the property after the death of Home Pension users Open
- The total loan repayment amount is limited to the house disposition price.
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The customer may repay their loan entirely or in part at any time without prepayment penalties.
(However, the initial guarantee fee is not refundable.)Loan repayment Time of repayment Amount to be repaid Remarks The value of property
< Loan balanceHouse price Shortfall not claimed against the inheritor The value of property
> Loan balanceLoan balance Inheritor takes back the residual value
7 Tax Benefits Open
| Description | Remarks |
|---|---|
| For settlement of mortgage | Exemption of registration tax, Education tax, the obligatory purchase of National Housing Bonds and Special tax for Farming and Fishing villages |
| Home Pension users | 25% reduction of property tax(limited to 25% of tax based on KRW500 million) Interest paid ondeductible from taxable income (Up to KRW2 million) |