"2 Billion Won Apartment, 600 Million Won Loan Provided": Will 'Seller Financing' Spread Amid Tight Regulations?

Amid the government's tightened loan regulations and pressure from tax reforms, a so-called "landlord loan" practice, where sellers directly provide loans to buyers for high-priced properties, is emerging.

It was recently revealed that President Lee Jae-myung sold his apartment in Yangji Village, Bundang, for 2.9 billion won and established a mortgage of over 1.7 billion won on the property. Similar transaction methods are now appearing in the market.

In fact, a listing for an apartment in Jagok-dong, Gangnam-gu, posted on a real estate portal, includes a condition stating that "the landlord will provide a 600 million won loan" out of the 2 billion won sale price.

For a 2 billion won home, current mortgage loans from financial institutions are limited to 400 million won. In this scenario, it appears the buyer pays 1 billion won of the balance with their own funds—excluding the mortgage loan—and pays interest at market rates to the seller for the remaining amount.

Another listing in Jamsil, Songpa-gu, Seoul, which was posted yesterday (July 20), also states that "seller financing is available."

This is a technique known as "seller financing," used when the interests of buyers, who struggle to secure the balance due to significantly reduced loan limits following regulations implemented in June last year, align with those of sellers looking to dispose of their homes quickly.

Seller financing is a method where the seller secures the unpaid balance or provides financial support when it is difficult to raise funds solely through loans from financial institutions. It is used on a limited basis in the high-priced housing market.

This practice also spread in the past when the Moon Jae-in administration completely banned mortgage loans for homes exceeding 1.5 billion won.

While President Lee Jae-myung recently established a mortgage of 1.77 billion won for the buyer when selling his Bundang apartment, experts noted that it is difficult to conclude that this constitutes seller financing, as the specific details of the contract have not been disclosed.

However, the People Power Party criticized the move, stating, "They pushed the narrative that gap investment is speculation and strictly regulated loans, yet the President sold his house on credit," adding, "They might as well change the ruling party's name to 'Democratic Mortgage'."

As the controversy grew, the Blue House explained yesterday that "the content on the property registration was due to the buyer's circumstances."

The Democratic Party also stated today, "President Lee's recent completion of his home sale at 2.9 billion won, which is lower than the market price, is an expression of his strong will to realize the policy of real estate normalization."

Reported by Lee Hyeon-yeong | Video by Choi Gang-san | Graphics by Lee Su-min | Produced by SBS Digital News
※ Please note: This article was translated by AI and may contain errors.