KHFC helps first-time homebuyers

By Kim Jae-won

Korea Housing Finance Corp. (KHFC), a state-run housing finance company, provides low-cost home-backed loans and reverse mortgage programs to low-income families.

It offers customized housing financial services to a wide range of recipients from entrylevel employees to retired workers.

“The most important role of the company is to help tenants eventually own a home,” says Seo Jong-dae, CEO of the company.

The KHFC’s “Bogeumjari” (cozy nest) loan, a long-term fixed-rate mortgage with low borrowing costs, is a financial product of the company.

The company eased the eligibility requirement for Bogeumjari applicants in May to allow a broader range of low-income earners to benefit.

Through the program about 44 trillion won of Bogeumjari loans have been extended to some 480,000 households as of the end of August since its establishment of 2004.

KHFC also provides guarantees for entry-level employees and young couples who seek to borrow money for their “jeonse”. Jeonse is a financial system in Korea, where the tenant pays about half the market price of the home to rent it up front and gets the money back after the expiration of their contract, which usually lasts two years. The accumulated interest is kept as rent.

In February, a transfer loan program called “Stepping Stones Jeonse Guarantee” started. It enables low-income families who pay high interests to second-tier financial companies to transfer their loans. A household whose family annual income is 50 million won or less is eligible to apply.

A reverse mortgage, better known as “housing pension” here, is another option which allows retirees to get paid a monthly income by providing their house as collateral. A couple, aged 60 or more, owning one house worth less than 900 million won can apply for the company’s reverse mortgage program.

They can get paid pensions until their death. Afterwards the company sells the house and pays the remaining amount of the housing price to the will beneficiaries.

If the housing price is worth less than the pensions already paid out, the company takes the loss, and does not demand compensation.

More than 10,000 people applied for the programs in the five years since its launch in August 2007, asserting great popularity here.