If people are taking bank loans to rent a home, why don't they just take mortgages to buy their homes? Is it because there is no land/houses available?
You can get a loan for nearly 70% of the jeonse deposit from the bank, and this money will be fully returned to you when the rental is over, which means you will only pay some monthly interests without burdens of paying back the principal. But if you take a mortgage to buy a house, you will have to continuosly pay back the principal as well as the interests. Plus, there'll be a lot of taxes to pay when you buy a house.
@@김이제-z3t thank you for the explanation. But I have a few more questions if you don't mind 😊 How much is the interest paid? And who is it paid to? The bank? If paid to the bank & the deposit is fully returned to the renter, then how does the landlord make money if there's no monthly rent collected with the jeonse system?
@@EvaMariposa Interest rate will be around 2 % depending on your age, income, and other conditions. And of course the interest is paid to the bank. With this jeonse system, landlords can benefit in 2 ways : 1. they can have big sum of money, which amounts up to 70~80% of the house value. They can invest that money, and when the rental is over and they have to pay back jeonse deposit to tenant, they can get a new tenant with the same or higher jeonse deposit, so technically they are keeping that money as long as they rent their house as jeonse. 2. Since jeonse deposit takes nearly 70~80% of the house value, landlords can buy a house by only investing 20~30% of the house price(the rest will be covered by the jeonse deposit from the tenants). And this is where many speculators are taking advantage of this jeonse system. They buy a house with jeonse only investing 20% of the house price, and meanwile, the house price goes up(which happens always) they resell it, and end up making short term profit while the burden of increased housing price falls on the tenants who actually live there. The recent housing measures of the government aim to stop this kind of speculations, and we will see how these measures work out.
HKim0072 but isn’t that the whole reason for taking your money and investing it in real estate ? It is to make a profit on your investment. An investment is suppose to bring a profit, because one day, those profits will be the money the investor will need to support themselves to live.
@@cyann410 Yup, that's thinking from a rich person's perspective. The masses make the wealthy even more money by policies that screw the lower / middle class. This is capitalism. Someone needs to balance the rules to help the lower / middle class gain wealth. There is no easy answer to this. In the US, your primary home mortgage interest is tax deductible. I am not familiar with Korean tax law. Not important enough to ask my cousins in Korea and too lazy to google. Not that curious.
@@RTYB This isn’t about owning. This is about flipping homes. The renting system explicitly is THE OPPOSITE OF OWNING A HOME. This flipping pushes up real estate prices effectively pricing out an average person wanting TO OWN A F-ING HOME.
You need to learn about the macroeconomy. Moon as he faced the shortage of housing created demand by jeonse. The demand caused further scarcity. He didn't understand the economy well. He should have decreased the demand and increased the supply of housing. He should have allowed more public housing projects. This will increase the supply. And at the same time, should have urged the mortgage bankers to demand more down payment to secure the equity instead of raising interest rates that may have harmed the overall economy. Now they are forced to raise the interest rate which is causing their GDP to shrink. Moon is still popular with Koreans. I have no idea why. His policy wrecked the Korean economy. And Koreans don't seem to admit that. Looking at people here, people just are not understanding the economy.
How is it good for the overall housing market when there is already a shortage? How is that good for the country? You are an idiot. That will result in further scarcity of housing. And the price increase for the ordinary Korean citizens.
In 2013 me and my husband are so lucky to find a 3 bedrooms apartment to rent for less than 3M ￦ /Month (Utilities are included) in Nonhyeon dong area.
![[NEWs GEN] Why people in their 20s, 30s are most vulnerable to 'jeonse scams'](http://i.ytimg.com/vi/1GHgQu9Tf2k/mqdefault.jpg)
If people are taking bank loans to rent a home, why don't they just take mortgages to buy their homes?
Is it because there is no land/houses available?
Eva V That is a good question. I would love to know the answer.
You can get a loan for nearly 70% of the jeonse deposit from the bank, and this money will be fully returned to you when the rental is over, which means you will only pay some monthly interests without burdens of paying back the principal.
But if you take a mortgage to buy a house, you will have to continuosly pay back the principal as well as the interests. Plus, there'll be a lot of taxes to pay when you buy a house.
@@김이제-z3t thank you for the explanation. But I have a few more questions if you don't mind 😊
How much is the interest paid? And who is it paid to? The bank?
If paid to the bank & the deposit is fully returned to the renter, then how does the landlord make money if there's no monthly rent collected with the jeonse system?
@@EvaMariposa Interest rate will be around 2 % depending on your age, income, and other conditions. And of course the interest is paid to the bank. With this jeonse system, landlords can benefit in 2 ways : 1. they can have big sum of money, which amounts up to 70~80% of the house value. They can invest that money, and when the rental is over and they have to pay back jeonse deposit to tenant, they can get a new tenant with the same or higher jeonse deposit, so technically they are keeping that money as long as they rent their house as jeonse.
2. Since jeonse deposit takes nearly 70~80% of the house value, landlords can buy a house by only investing 20~30% of the house price(the rest will be covered by the jeonse deposit from the tenants). And this is where many speculators are taking advantage of this jeonse system.
They buy a house with jeonse only investing 20% of the house price, and meanwile, the house price goes up(which happens always) they resell it, and end up making short term profit while the burden of increased housing price falls on the tenants who actually live there.
The recent housing measures of the government aim to stop this kind of speculations, and we will see how these measures work out.
@@김이제-z3t this is very insightful! Thanks for explaining.
Here’s the deal:
Landlords will ALWAYS have the advantage. They will always find the most profitable way to extract money from the tenant regardless.
HKim0072 but isn’t that the whole reason for taking your money and investing it in real estate ? It is to make a profit on your investment. An investment is suppose to bring a profit, because one day, those profits will be the money the investor will need to support themselves to live.
@@cyann410 Yup, that's thinking from a rich person's perspective.
The masses make the wealthy even more money by policies that screw the lower / middle class. This is capitalism.
Someone needs to balance the rules to help the lower / middle class gain wealth. There is no easy answer to this.
In the US, your primary home mortgage interest is tax deductible. I am not familiar with Korean tax law. Not important enough to ask my cousins in Korea and too lazy to google. Not that curious.
@@HKim0072 Lmao, you're really screwed up in your head if you think owning land or a house is "a rich person's perspective".
@@RTYB This isn’t about owning. This is about flipping homes. The renting system explicitly is THE OPPOSITE OF OWNING A HOME. This flipping pushes up real estate prices effectively pricing out an average person wanting TO OWN A F-ING HOME.
You need to learn about the macroeconomy. Moon as he faced the shortage of housing created demand by jeonse. The demand caused further scarcity. He didn't understand the economy well. He should have decreased the demand and increased the supply of housing. He should have allowed more public housing projects. This will increase the supply. And at the same time, should have urged the mortgage bankers to demand more down payment to secure the equity instead of raising interest rates that may have harmed the overall economy.
Now they are forced to raise the interest rate which is causing their GDP to shrink. Moon is still popular with Koreans. I have no idea why. His policy wrecked the Korean economy. And Koreans don't seem to admit that.
Looking at people here, people just are not understanding the economy.
Annoying af background 😡 music!! Aargh!!!🤬🤬
I think the Jeonse system was a unique and good deal for Koreans and I’m sad if it is going away.
How is it good for the overall housing market when there is already a shortage? How is that good for the country? You are an idiot. That will result in further scarcity of housing. And the price increase for the ordinary Korean citizens.
In 2013 me and my husband are so lucky to find a 3 bedrooms apartment to rent for less than 3M ￦ /Month (Utilities are included) in Nonhyeon dong area.
And the hits just keep on coming...
존나게 비싸죠
Lorea una maravilla