HF Lowers early repayment charges for fixed-rate conforming loans by 0.3%p
- Date 2015-10-01
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“HF Lowers early repayment charges for fixed-rate conforming loans by 0.3%p”
- Early repayment charges will be lowered from 1.5% to up to 1.2% in a three year period, starting November -
The Korea Housing Finance Corporation (HF, CEO Kim Jae-Chun) announced on the 1st that it would lower the early repayment charges for fixed-rate conforming loans to 1.2%, starting November 2.
* A conforming loan is a long-term, fixed rate, mortgage loan that conforms to pre-defined standards or
conditions that are suitable for securitization. In Korea, 15 banks including KB Kookmin Bank, Woori Bank,
Shinhan Bank, KEB, and Hana Bank offer conforming loans.
Mortgage account holders are currently charged up to 1.5% of the balance amount (based on the number of
days elapsed from the loan agreement date) for repaying the loan in less than three years from the loan
agreement date. The new rate will be up to 1.2%, down 0.3%p from the current rate.
<Calculation method for early repayment charges>
After the rate change, mortgage accountholders could save up to 300,000 won in charges (depending on the number of
days elapsed from the loan agreement date) for repaying 100 million won earlier than the agreed term.
<Illustration of early repayment charges for 100 million-won balance payoff>
<Early Repayment Case>
| When a homeowner who took out a 20-year mortgage with a 4% interest rate repays 100 million won one year after the loan agreement date and switches to another loan with a 3% interest rate, he will be charged 1 million won under the current system. The same person will pay only 800,000 won for early payoff after the rate change. |
An HF official said, “After lowering the rate for early repayment charges on Bogeumjari loans in March, we are also
lowering the rate for early repayment charges on conforming loans after a careful discussion with banks.” He also
added, “HF will continue to play a leading role in rationalizing the rates for such charges and fees by periodically
reviewing and adjusting rates based on the changes in the market.”