South Korea Eases Reverse Mortgage Rules, Increases Payouts for Low-Priced Homes

In a significant move to bolster support for the elderly and homeowners, South Korea is set to implement key improvements to its reverse mortgage program, known as Jutaek Yeonkeum, effective June 1st. These enhancements are particularly aimed at benefiting individuals who own lower-priced homes, ensuring they receive more substantial financial support in their later years.

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Starting June 1, the monthly pension payment will increase for those who own low-priced homes worth less than 180 million won, and the requirement to actually reside in the home will be eased.

The most notable change involves an increase in monthly payouts for those holding homes valued at less than 180 million won. For instance, an average recipient aged 77 with a home valued at 130 million won, who previously qualified for the preferential rate, will now see their monthly payout increase from 14.8% to 20.5%. This adjustment acknowledges the financial realities faced by owners of more modest properties, providing them with greater security.

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For example, the preferential rate for an average recipient (77 years old, 130 million won) who owns a general home will increase from the existing 14.8% to 20.5%.

Furthermore, the Korea Housing Finance Corporation (KHFC) is relaxing the 'actual residence' requirement for Jutaek Yeonkeum applicants. Previously, applicants had to reside in the property at the time of application. Now, married couples who own a single home will be eligible even if they are temporarily residing elsewhere due to hospitalization, caring for children, or moving into a senior living facility. This flexibility aims to accommodate diverse life circumstances without penalizing homeowners. Additionally, a new '세대이음 주택연금' (Generation-Connecting Reverse Mortgage) product will allow children to inherit and continue their parents' reverse mortgage on the same property, provided they are over 55 and utilize individual withdrawal options to repay the outstanding loan, thereby simplifying intergenerational wealth transfer.

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In cases where a married couple owns one home and has reasons such as hospitalization, child-rearing, or moving into a senior welfare facility, they can still join the pension plan without actually residing there.