10 questions about JTYK

Know your JTYK right before subscription

Marking its 7th anniversary this year, JooTaekYeonKeum (JTYK)―the reverse mortgage loan scheme offered by the Korea Housing Finance Corporation (KHFC)―has drawn much attention as a financial instrument for financing people's later lives. The state-guaranteed financial instrument allows senior citizens aged 60 or above to hold their homes as collateral and live in them for the rest of their lives while regularly receiving living expenses every month. Wrong information about the scheme, however, still leaves many people reluctant to join it. Below are 10 common questions and their answers.

Q1: I bought and moved into a new home, but the previous home remains unsold. Am I eligible for JTYK subscription?
A: Yes, you are. In the past, only those households owning a single home (for both spouses) could join the JTYK scheme. With the recent policy shift on March 10th, however, those owning two homes can also subscribe to JTYK on the condition that they sell the one they do not live in within three years. Your monthly benefits will be suspended if you fail to sell the other home in three years, but once the house is sold, you can receive the suspended monthly benefits retroactively.

Q2: I have a house but let out the first floor to a small supermarket. Is this sort of commercial-residential building also eligible for JTYK?
A: Yes. Starting from March 10th this year, commercial-residential buildings, store-combined buildings, and other mixed-purpose housing, which were previously excluded from JTYK subscription, became eligible as long as the share of residential area is more than half. In this case, you may continue to utilize the commercial part of the building for business purposes, such as renting it out (only deposit-free monthly rentals are allowed) or running your own business.

Q3: As a result of urban planning, a road will be built in the place of my house. Am I still eligible for JTYK in this case?
A: Even when your home is designated as a site for building facilities under urban/county planning, you may still join JTYK as long as it is "before the approval of execution plans." Once the road or other facilities are built, you may use your compensation either for moving into another house and continuing to receive pension benefits or for repaying your benefits to date and cancelling the contract.

Q4: Are there any JTYK offerings for people hoping to receive more when they are younger and enjoying a proactive life after retirement?
A: The right solution for you will be the Fixed-Term JTYK in which you can decide the period that you will receive pension benefits. The Fixed-Term JTYK allows subscribers to live in their respective homes for the rest of their lives and receive benefits for a period of time selected in advance by the subscribers. It provides greater monthly benefits than the Fixed-Amount JTYK and is useful for those who have basic age security schemes in place (e.g. national pension) and wish to receive more pension benefits while they are more active. For instance, a Fixed-Term JTYK plan with a payment period of 10 years (with a house worth 300 million won) offers a monthly payment of 1.41 million won for senior citizens aged 65 and 1.59 million won for those aged 70. As a result, each month, you get 590,000 won and 600,000 won more, respectively, than the Whole-Life JTYK.

Q5: I own a residential officetel other than the house that I currently live in. Will I be classified as a temporary double-homeowner and required to sell the officetel in three years?
A: No. A residential officetel does not constitute a house under the Housing Act and is thus not classified as a house when calculating the number of houses one owns. Therefore, you can receive JTYK benefits with the house that you currently reside in without having to sell your officetel.

Q6: Am I not allowed to move out while receiving JTYK benefits?
A: You are free to move out during the period. When you move into another place, you can continue to receive JTYK benefits by switching the collateral to your new home. In this case, your monthly benefits or other factors may change depending on the price difference between your previous and new homes. If your new home is priced higher than the previous one, for example, you may pay an initial guarantee equivalent to the difference and receive more monthly benefits.

Q7: Does the death of a JTYK subscriber reduces the amount of benefits for his/her spouse?
A: No. In the public official pension, national pension, and other pension schemes, the death of the main recipient means his/her spouse will receive only part of the existing pension benefits in the form of pension for the bereaved family. In JTYK, on the other hand, the spouse receives the same amount of monthly benefits previously offered even after the subscriber's death.

Q8: JTYK offers pension benefits on a monthly basis, making it hard to tackle situations in which a large amount of money is needed. Am I correct?
A: No. In case you may need a large sum of money later, you may set the maximum limit for lump sum withdrawal either in advance or while receiving JTYK benefits. It should be noted, however, that your monthly benefits will decrease when you set this ceiling. If you have set the maximum limit for lump sum withdrawal and you find yourself hardly using it, you may lift the limit anytime and receive more monthly benefits.

Q9: Am I not allowed to join JTYK if I have mortgage loans?
A: You can subscribe to JTYK by paying back your existing mortgage loans with JTYK's lump sum payment.

Q10: Do the recipients of JTYK become ineligible for the Basic Old-Age Pension due to their increased income?
A: No. When calculating your income to examine your eligibility for the Basic Old-Age Pension, JTYK is classified as a liability, not as income. Therefore, receiving JTYK benefits does not mean that your benefits from the Basic Old-Age Pension will drop or be lost.