"The house is paid for, but the bank account is empty" is the classic retirement bind, and Korea's housing pension exists for exactly it. But the first fork appears immediately — there are two methods, mortgage and trust, and the Korea Housing Finance Corporation issues two entirely separate explanatory documents for them. This article sets those two guides side by side.
The housing pension is "a scheme under which a homeowner receives living funds for later life as a monthly annuity from a financial institution, secured on the home they own."
There are only two eligibility conditions — ① the owner or their spouse is 55 or over; ② the owner or their spouse is a national of the Republic of Korea (including overseas nationals).
— Korea Housing Finance Corporation, "Housing Pension Explanatory Statement and Checklist" (revised 18 May 2026, effective 1 June 2026)
⭐⭐ The two methods diverge on ownership
The names sound procedural, but what differs is who holds title to the house. And from that, spousal succession and letting diverge completely.
| Item | Mortgage method | Trust method |
|---|---|---|
| ⭐ Security | A mortgage is registered with the Corporation as mortgagee | The home is placed in trust with the Corporation (title transfers) |
| ⭐⭐ Ownership | Stays with you | ⚠️ Passes to the Corporation (trustee). You hold beneficiary rights to live in, use and take income from it |
| ⭐⭐ Spousal succession | ⚠️ Not automatic — within six months of death, title must be transferred to the spouse and the debt assumed | ⭐ The spouse is named as post-death beneficiary. "A surviving post-death beneficiary acquires the settlor's beneficial rights from the moment the settlor dies" |
| ⭐ Letting | "Letting all or part of the home for rent only, with no deposit, is permitted" (Corporation's consent needed to let the whole) | ⭐ Letting with a deposit is also possible — the deposit is paid into an account the Corporation designates |
| Residual estate | Follows ordinary inheritance | The Corporation sells and pays the residue to the person you named while alive |
| ⭐ Trust fee | — | "The Corporation does not charge a trust fee for performing trust duties" |
| Switching later | ⭐ "Even after joining, you may switch between the mortgage method and the trust method by amending the terms" | |
⚠️⚠️ "Automatic spousal succession" is not true of the mortgage method
It is widely described that way, but the mortgage-method guide attaches conditions. The second of the events triggering repayment reads:
"Where, within six months of your death, title to the entire share of the home has not been transferred to your spouse and the annuity loan debt has not been assumed"
"Where, at the time of debt assumption after your death, your spouse falls under any of the following, the debt may not be assumed" — including holding adverse credit information, four grounds in all
— Korea Housing Finance Corporation, Housing Pension guide (mortgage method), 5.(1) Timing of repayment
⚠️ Two things stack here: a six-month clock, and the fact that assumption can be refused because of the spouse's own circumstances. If your spouse carries credit problems, succession under the mortgage method can be blocked.
⭐ The trust method has no such step. "The settlor shall designate their spouse as post-death beneficiary" is built into the contract, and "a surviving post-death beneficiary acquires the settlor's beneficial rights from the moment the settlor dies." ⚠️ With one caveat: "where the legal marriage is dissolved during the trust period (other than by death), the post-death beneficiary loses that status."
⭐ Age is measured on the younger spouse, not the older
This is the point most often stated backwards. The fill-in line in the guide reads: "The younger of you and your spouse is ____ years old as at the date the mortgage is registered."
| Fixed-term option | 10-year | 15-year | 20-year | 25-year | 30-year |
|---|---|---|---|---|---|
| Eligible ages (based on the younger spouse) | 65–74 | 60–74 | 55–68 | 55–63 | 55–57 |
⭐ The table's own footnote says "based on the spouse of lower age." Where there is a large age gap, the calculation follows the younger partner — so estimating on "the older one" produces a figure higher than reality.
⚠️ There is also a ceiling on house price. "Where the house price exceeds 1.2 billion won, the price is treated as 1.2 billion won in determining the payment." Ownership is limited to one home in principle, but two or more are allowed if their published prices total 1.2 billion won or less (joining on the one you live in). Two-home owners above that threshold may join on condition of disposing of the non-residential home within three years.
⚠️ There is a fixed order for valuing the house
Not a rule of thumb like "a percentage of market value" — an order.
| Rank | Basis (as at the application date) |
|---|---|
| ① | Korea Real Estate Board internet price (not applicable to residential officetels) |
| ② | Kookmin Bank internet price |
| ③ | Published price (or the standard market price where none exists) |
| ④ | An appraisal within the last six months by a valuer under agreement with the Corporation — ⚠️ at your own cost |
⭐ "However, where you so request, ④ may be applied first." If you think the internet price understates your home, you can ask for an appraisal to lead — and pay for it. ⚠️ Where internet prices apply, the lowest floor takes the lower average and other floors take the midpoint or the general average.
Seven payment methods, three payment patterns
It is usually reduced to "lifetime or fixed term," but the guide lists seven.
| Method | The guide's definition |
|---|---|
| Lifetime | "Paid monthly for life, with no drawdown limit set" |
| Lifetime mixed | Draw within a limit (50% of the loan limit) and take the rest for life — ⚠️ "the monthly payment becomes smaller than under the lifetime method" |
| Fixed-term mixed | Annuity for a set period only. ⚠️ 5% of the loan limit (the mandatory drawdown limit) may be used only for home maintenance and medical costs after the term ends |
| Loan repayment / preferential | Draw within a limit (over 50% and up to 90% of the loan limit) to clear an existing loan, and take the rest for life |
| ⭐ Preferential / preferential mixed | For basic pension recipients aged 65+ owning one home worth under 250 million won (per couple) — "a larger monthly payment than the lifetime method" |
⭐ The preferential row is the one to look at hardest. Meet the conditions (basic pension recipient plus a single home under 250 million won) and the same house pays more. Whether you qualify for the basic pension is covered in the basic pension guide.
| Pattern | What it does |
|---|---|
| Level | "Fixes the monthly payment at a constant amount" |
| ⚠️ Front-loaded | More early on, then "around 70% of the initial monthly payment" — the initial period is chosen from 3, 5, 7 or 10 years |
| ⭐ Step-up | "The first monthly payment is lower than under the level pattern, but rises by 4.5% every three years" |
⭐ Read the "70%" in the front-loaded option first. It does not add money — it pulls money forward and cuts the tail. The step-up option runs the other way, rising 4.5% every three years. ⭐ On a lifetime method you may change pattern "once, within three years of the first drawdown."
⭐ Cost comes in three strands — and the interest compounds
| Item | Rate |
|---|---|
| Initial guarantee fee | Once, 1.0% of the house price (may be under 1.0% where the price is high and the applicant older) |
| Annual guarantee fee | 0.95% a year of the outstanding guarantee, accrued daily and charged monthly — 1.0% on the loan-repayment methods |
| ⭐ Loan interest | COFIX (new lending) + 0.85% margin, resetting every six months — margin of 0.75% on the loan-repayment methods |
⚠️⚠️ The guide explains why the interest compounds. "Unlike an ordinary loan, where interest must be paid monthly in cash, the housing pension does not require interest to be paid in cash during the term. The interest due each month is therefore added automatically to the loan balance and calculated on a compound basis."
Its own worked example: "at a monthly rate of 1% on 1 million won, an ordinary loan requires 10,000 won a month, 120,000 won over a year, paid in cash. The housing pension takes no cash — so through compounding, after one year the balance exceeds 1.12 million won."
⭐ "No cash leaves" and "there is no cost" are different statements. The guarantee fee works the same way — "you do not pay it to the Corporation in cash yourself; the financial institution creates a loan at your expense and pays the Corporation." All three strands accumulate into the loan balance. Which is why the guide adds: "if you draw the housing pension for a long time, the interest automatically added to the balance through compounding can grow larger."
⭐⭐ But any shortfall is not pursued
"Enforcement under the housing pension is possible only against the secured home. That is, even if repayment up to the value of the house falls short, the Corporation will not claim the shortfall from you or from your children or other heirs."
"You repay the lesser of the house price at the repayment date and the outstanding loan (guarantee) balance."
— Korea Housing Finance Corporation, Housing Pension guide, 6. Scope of enforcement / 5.(2) Amount repayable
⭐ Those two sentences are the scheme's core design. Live long enough that the total drawn exceeds the value of the house and the difference does not pass to your children. ⚠️ Four exceptions are named, though — tax claims, wage, industrial-accident and severance claims, annuity paid after grounds for termination arose, and "amounts unrecoverable because the secured home was damaged through the debtor's intent or gross negligence." In the other direction, a surplus goes through ordinary inheritance under the mortgage method, or to the person you named under the trust method.
⚠️ What you can no longer do once payments start
| Item | The guide's wording |
|---|---|
| Security interests | "Creating a mortgage, provisional-registration security or other security interest over the home" — not permitted |
| Jeonse rights | "Creating a jeonse right over the home" — not permitted |
| ⭐ Letting | Mortgage method: "letting for rent only, with no deposit… is permitted." Trust method: deposits permitted (term two years in principle, no more than four deposit-bearing tenancies) |
| ⚠️ Residence registration | "Your or your spouse's registered address must match the address of the secured home" — exceptions require the Corporation's approval |
| ⚠️ Rejoining | "Where you terminate early, you may not rejoin on the same home for three years from the termination date" |
⚠️ There are five recognised exceptions to the residence requirement — admission to hospital or a care facility for treatment or convalescence, an extended stay in another home to be cared for by children, moving into elderly housing welfare accommodation, isolation, detention or imprisonment by a public authority, and other cases the Corporation accepts. All of them require the Corporation's approval.
⭐ If you change your mind, you have 30 days. "You may withdraw from the agreement within 30 days of the first guaranteed drawdown." Repay the balance in full and the guarantee fees (initial and annual) are refunded. And where the balance is repaid in full and the agreement terminated "before five years have passed from the first drawdown," the initial fee is refunded less an amount proportionate to the period used.
Questions this raises
Does it affect basic livelihood support?
⚠️ The guide carries a warning of its own — "using the housing pension may reduce your entitlement to national welfare services (such as the National Basic Living Security system)." Exactly how it feeds in is not stated in this document. If that applies to you, check before joining.
Can the payments be garnished?
⭐ There is a dedicated housing pension account: "only amounts up to 2.5 million won, the minimum cost of living, may be deposited, and funds deposited in it cannot be attached." Nothing but the monthly payment may be paid into it, but withdrawals and transfers are unrestricted. You obtain a certificate from the Corporation and apply through your bank.
What if I move?
There is a procedure to change the secured home, but the new home's published price must be 1.2 billion won or less, and no higher than the existing home's. If collateral value rises the monthly payment rises (with an additional initial fee); if it falls, part of the balance is repaid. ⚠️ Switching between ordinary housing, elderly welfare housing and officetels is not permitted.
What if the building is redeveloped?
"You may continue to use the housing pension even if the secured home is demolished." But under the mortgage method the Corporation's first-ranking mortgage must be preserved, so relocation loans may be unavailable; and under the trust method, because the Corporation holds title it becomes the association member, so you must switch to the mortgage method by a stated deadline.
Do my children have to consent?
⚠️ Neither guide contains any child-consent requirement. The signature blocks are for the owner and the spouse only. That said, the trust method has you name the residual beneficiary while alive, and that designation is itself an inheritance decision. For pensions where bereavement or divorce is involved, see split and survivor pensions.
The first thing to settle about a housing pension is not the amount but the method. Keep the title and accept a procedure standing between your spouse and the annuity, or hand over the title and have your spouse's rights vest the moment you die — that fork comes first.
Sources
- Korea Housing Finance Corporation — Housing Pension Explanatory Statement and Checklist, Form 2 (mortgage method) (revised 18 May 2026, effective 1 June 2026, 27 pages). ⭐ Source for the definition and the age-55 / Korean-national conditions, the seven payment methods and three payment patterns, the fixed-term age table (based on the younger spouse), the 1.2 billion won ceiling and the valuation order ①–④, initial fee 1.0% and annual fee 0.95% (1.0% on loan-repayment methods), COFIX + 0.85% (0.75%) resetting every six months, ⭐⭐ the compounding explanation and its 1-million-won example, the repayment triggers including ⚠️ "within six months of your death… title transfer and debt assumption," ⭐⭐ the non-recourse scope and its four exceptions, the prohibited acts and the annotation on the register, the five residence exceptions, the 30-day withdrawal, the three-year rejoining bar, and the rules on number of homes owned.
- Korea Housing Finance Corporation — Housing Pension Explanatory Statement and Checklist, Form 2-2 (trust method) (revised 18 May 2026, effective 1 June 2026, 42 pages). ⭐ Source for the definition of the trust method ("placed in trust with the Corporation (trustee) — title transfers… contracted as a will-substitute trust"), ⭐⭐ "the settlor shall designate their spouse as post-death beneficiary" and "acquires the settlor's beneficial rights from the moment the settlor dies," the loss of that status on dissolution of the marriage, the settlor's four beneficial rights, ⭐ "the Corporation does not charge a trust fee," the deposit paid into a Corporation-designated account and managed by it with the two-year term and four-tenancy cap, delivery of residual trust assets to the named person, the disposal of trust property (public auction as the rule) and the order of settlement, the switch to the mortgage method on redevelopment, and ⭐ "you may switch between the mortgage method and the trust method by amending the terms."
- Korea Housing Finance Corporation — common to both guides. Source for the dedicated housing pension account ("only amounts up to 2.5 million won… cannot be attached"), ⚠️ "may reduce your entitlement to national welfare services (such as the National Basic Living Security system)," and the table of collateral-value changes on moving home. Main line 1688-8114.
What we could not confirm
- ⭐ Actual monthly payment tables by age and house price. The guides leave these blank to be filled in at the consultation. So no "at this age, this much" figures appear here. Run your own through the Corporation's estimate tool.
- ⭐ "Monthly payments rose by X% in 2026." Widely quoted, but no increase rate appears in these guides. The figure carried in an earlier version of this article has been removed.
- ⚠️ "Valuation runs at 80–90% of market price." The guides set only an order of sources and give no ratio to market value. That statement has also been removed.
- How exactly basic livelihood entitlements are reduced. The guides stop at "may be reduced."
- Effects on health insurance contributions or basic pension assessment. Not addressed in either guide.
- Acquisition and property tax treatment under the trust method. We confirmed only that costs fall on the settlor or post-death beneficiary; the tax consequences of the title transfer are not in this document.
- Whether the two methods pay differently. Neither guide addresses any difference in amount between them.
- Full eligibility criteria by property type. Elderly welfare housing and residential officetels are mentioned, but no table of requirements appears in these documents.
Written as of July 2026. The above reproduces the wording of the two explanatory statements the Korea Housing Finance Corporation issues on joining (effective 1 June 2026); amounts are left out because they are filled in at the consultation. For the whole retirement structure see the three-tier pension; for the gap before the national pension starts, bridging the pension gap; for a sense of costs, living costs after retirement. This is general information, not financial advice. You must hear the Corporation's own explanation before joining (main line 1688-8114).
