HF to resume deposit money guarantee from September 15, 2010  

- HF to guarantee up to 50 million won per home -

On September 14, 2010, Housing & Finance (HF, CEO Joo-jae Lim) announced the resumption of its ‘deposit money repayment guarantee program’ from September 15, 2010 in view of the possible conflicts between landlords and tenants on the repayment of key deposit money as a result of the recent recession in the real estate market.

The guarantee program is designed for those landlords who are unable to return jeonse deposit money to tenants due to the fall in the deposit price. Through the program, landlords can easily take out a loan to cover the gap in the deposit amount. Though the guarantee is given to the landlords, the actual benefit goes to the tenants as the loan is directly deposited to the tenants’ bank account.

The maximum loan amount is set at 50 million won per home, but an individual assessment will limit the loan within the actual required amount. Loans applied in the amount of 25 million won or less will be subject to less stringent standards. Though there is no limit in the size of a home, eligible homes must be 900 million won or less in value. The maximum term of the guarantee loan is four years and an annual guarantee rate of 0.6% applies. The guarantee loan does not require mortgage registration or any such measures, and is restricted to those with a credit rating of 10 by a credit rating company.

To apply, a landlord (homeowner) must visit one of the designated banks and submit an application form and supporting documents such as a copy of the lease contract. Following a review of the application, the applicant can take out a loan to pay back the deposit money.

“Due to the recent recession in the real estate market, tenants are having difficulties in getting back their key deposit money from their landlords,” said an HF official. “The guarantee program will help prevent possible conflicts between landlords and tenants and contribute to the housing stability of tenants.” 

From September 15, 2010, HF will increase the maximum guarantee from 70% to 80% of the deposit amount. To maximize the effect of the guarantee loan, it will also raise the guarantee limit from 1-2.5 times to 1.5-3 times the annual recognized income.

To ensure that more people benefit from this guarantee program, HF will also recognize income estimated based on national pension or national health insurance payments (up to 20 million won in recognized income) to accommodate landlords who cannot prove their income by way of a certificate of income.