Loan Restrictions Push Sellers to Offer Private Financing of Up to 2 Billion Won

Apartment listings have appeared in Gangnam-gu, Seoul, advertising that the seller can provide up to 2 billion won in loans to the buyer.

This includes a listing for a 104.9-square-meter unit at "Acro Samsung" in Samsung-dong, Gangnam-gu, with an asking price of 7.39 billion won.

A listing for a unit at "Resens" in Jamsil-dong, Songpa-gu, with an asking price of 4.45 billion won, also featured a notice stating that seller financing is available.

As the financial authorities' intensive regulations on the total volume of household loans raise the barriers at commercial banks, properties featuring seller financial conditions are emerging one after another in Seoul's Gangnam district and parts of Gyeonggi Province.

Seller financing is a method where the buyer borrows a portion of the purchase price from the seller, transfers ownership, and the seller establishes a mortgage on the property to secure the debt.

The seller earns interest income depending on the terms, while the buyer can secure funds that could not be covered by commercial bank loans.

Currently, in regulated areas, if a housing price exceeds 1.5 billion won, the mortgage loan limit is restricted to 400 million won, and if it exceeds 2.5 billion won, it is limited to 200 million won.

Because there is a wide gap between home prices and bank loan limits, the housing purchase funds that cannot be met through the financial sector are being filled outside the institutional framework.

Housing funds moving outside of banks can also be seen in corporate in-house loans.

According to data submitted by SGI Seoul Guarantee to the office of People Power Party lawmaker Kim Sang-hoon, the guaranteed amount for private corporate in-house loans in the first half of this year reached 891.2 billion won, a 27.8% increase compared to the same period last year.

Among these, housing funds accounted for 660.3 billion won, or 74.1%.

A commercial bank official stated, "Housing demand has not disappeared; rather, only the amount of money that can be borrowed from banks has decreased," adding, "Even borrowers with sufficient repayment capacity under the Debt Service Ratio (DSR) are unable to receive loans due to total volume caps, leading them to seek funds outside the financial sector, such as corporate in-house loans, family borrowings, or seller financing."

The official further pointed out, "Since peer-to-peer loans lack standardized borrower protection mechanisms, as the scale grows, the risks of disputes and defaults can also accumulate."

(Reported by Jung Da-eun | Video by Seo Byeong-wook | Design by Lee Jeong-ju | Produced by SBS Digital News)
※ Please note: This article was translated by AI and may contain errors.