Shinhan Bank to allow mortgage loans for single homeowners switching homes

Shinhan Bank Co.’s headquarters in Seoul.

South Korean lender Shinhan Bank Co. reversed its policy of not granting mortgage loans to those with a single home and decided to allow them to borrow money when they purchase a new home.

Shinhan Bank said on Tuesday that it will make an exception to its policy announced four days ago of restricting mortgage and credit loans

Under the new plan, the bank will allow mortgage loans for homeowners with one property if they are selling their current home to buy a new one, with the caveat that they must sell their existing property on the day the mortgage loan is executed and provide proof of the sale and purchase agreements.

The bank also removed the loan limit for borrowers seeking a mortgage loan for living stabilization funds to return rental deposits. It had set a limit of 100 million won ($74,472) for these loans.

The bank also introduced exceptions to its credit loan policy, which limits loans to 100 percent of annual income.

Exceptions will be made in cases such as those preparing for marriage, the death of a spouse or immediate family member, childbirth, or when large sums are needed for surgery or illness.

With proper documentation, the loan limit can be increased to 150 percent of annual income, up to a maximum of 100 million won.

For marriage, a marriage certificate must be submitted within three months of the date of registration, and for family deaths, a family relationship certificate or death certificate must be submitted within six months. In the case of childbirth, a pregnancy diagnosis or confirmation letter must be submitted within three months before or after the birth (or expected birth) date.

“We have decided to introduce these exceptions to protect real demand customers and minimize inconvenience to financial consumers while strengthening risk management for household loans,” said a Shinhan Bank official.