South Korea to update relocation loan LTV basis for redevelopment

Starting on the 31st, the basis for calculating Loan-to-Value (LTV) ratios for relocation loans in redevelopment and reconstruction projects will change. Financial Services Commission Chairman Lee Eok-won clarified that the 'post-asset valuation' used for these calculations will be defined as the 'member sale price' (the price assigned to union members for their new homes).

Under the new system, the LTV will be calculated based on whichever is higher: the valuation of the existing property (pre-asset valuation) or the member sale price of the new property (post-asset valuation). This change aims to alleviate the financial burden on union members during the relocation process by providing a more realistic collateral value.

While the base value for the calculation may increase, the actual LTV regulatory ratios and maximum loan limits remain unchanged. For example, in regulated areas, the 40% LTV limit and the 600 million won maximum loan cap will still apply. The final loan amount will ultimately depend on individual member conditions, specific project details, and the credit assessment of financial institutions.