The Financial Services Commission (FSC) has decided to restrict mortgage maturity extensions for multi-home owners on apartments in the Seoul metropolitan area and regulated zones starting June 17, while granting exceptions for unavoidable circumstances such as tenant occupancy to minimize disruption to the housing market.
First, homes with existing lease contracts will be allowed mortgage maturity extensions as an exception until the tenant's residency period ends. The same applies when a lease contract is renewed. If a landlord and tenant make no explicit declaration regarding contract extension by June 16 — the day before the regulation takes effect — resulting in a tacit renewal, the maturity extension will be permitted until the end of the renewed contract.
For lease contracts expiring by July 31, tenants who exercise their right to request contract renewal will also exempt borrowers from having to repay the loan until the renewed contract period. In theory, this means loan extensions could be possible until the end of July 2028. Interim payment loans and relocation expense loans are excluded from the maturity extension restrictions. "We tried to allow exceptions for unavoidable cases as much as possible," an FSC official said.
In principle, anyone owning two or more homes is subject to the regulation regardless of where the properties are located. However, homes under a signed sale contract, unsold units after construction completion, daycare centers and culturally designated properties are excluded from the housing count. Privately built rental housing, properties inherited and those acquired through auction for creditor protection are also exempt. Homes in areas designated as depopulation or "areas of concern" by the Ministry of the Interior and Safety — including Dongducheon, Pocheon and Gapyeong in Gyeonggi Province, Goseong in Gangwon Province and Danyang in North Chungcheong Province — are also excluded.
Gifted properties are not granted exceptions. Financial authorities explained that it is difficult to recognize the acquisition of a home through a gift as unavoidable.
First-time homebuyers still receive a loan-to-value (LTV) ratio of 70%. The government's view is that easing lending rules at this point could trigger a vicious cycle of rising household debt.
As a basic rule, multi-home ownership for individuals and individual rental business operators is determined on a household basis. The FSC stated, "A rental business operator refers to a tax-registered rental business operator engaged in real estate leasing, whose primary business is rental."
