JTYK ‘more now, less later’ option launched

- Two-tier fixed monthly payment with a higher amount in the first ten years and less afterwards

- Offering borrowers more choice in addition to fixed-amount program, monthly payment increase option, and monthly payment decrease option

New JTYK (reverse mortgage) loan borrowers may opt for a payment option in which larger monthly cash advances are made during the first ten years of taking out the loan.

On July 30, the Korea Housing Finance Corporation (KHFC, CEO Seo Jong-dae) announced that the “‘more now, less later” payment option would become available July 31, 2012. The option guarantees senior borrowers a certain level of monthly cash advances that they can use to meet their cash needs when they are spending more for a certain period of time after retirement.

Before launching the new payment option, KHFC had offered three types of payment options: ▲ the “tenure payment program” where a fixed amount is paid out each month during the borrower’s lifetime, ▲ the “monthly payment increase option” where the amount increases by 3 percent every year, and ▲ the “monthly payment decrease option” where the amount decreases by 3 percent every year. Borrowers will now have a wider choice of payment options.

The new payment option is a two-tier fixed monthly payment with a one-time decrease in which borrowers receive a higher amount in the first ten years and a lesser amount of 70 percent of the initial monthly payment amount from the eleventh year on.

“This option is appropriate for those who are hesitant about getting a JTYK loan because they feel the amount of monthly payments is low or those who are interested in the monthly payment decrease option but are concerned that the monthly amount decreases every year,” said a KHFC official. “Borrowers need to select a JTYK payment program that best suits their lifestyle in consideration of their economic activities and consumption patterns.”