The biggest fixed cost most months is loan interest. If you are still holding a mortgage taken at a high rate a few years ago, refinancing to a lower one changes what leaves your account every month. In Korea you can now do it entirely in an app.
1. What it costs. The biggest variable is the early repayment fee — the FSS example gives 1.5% if repaid within three years of drawdown, waived after three. On a ₩300 million loan that is ₩4.5 million, so the real question is how many months it takes to earn that back.
2. Where the risk is. Refinancing means a fresh assessment, so current rules apply in full — stage-3 stress DSR has applied since 1 July 2025, and since 16 October 2025 the stress rate is 3.0% in the capital region and regulated areas (1.50% elsewhere), so your limit may be lower than it once was. Variable-rate loans take the full 100% of that stress rate.
3. What to do. Two ways around the fee: you may repay up to 10% of the original principal each year without charge, and switching from variable to fixed at the same bank waives it. The in-app comparison takes about 15 minutes — run it first.
The rate alone should not decide it. What follows uses only what is verifiable in public-agency and professional-body sources.
Start with where rates actually are
Bank of Korea figures for November 2025, on newly extended loans:
“In November the weighted average household loan rate at deposit banks (newly extended basis) was 4.32%…”
“Within household loans, mortgages (4.17%), jeonse loans (3.90%) and general unsecured loans (5.46%) rose by 0.19pp, 0.12pp and 0.27 respectively.”
“The fixed-rate share of mortgages was 90.2%”
These are November 2025 figures. The Bank of Korea’s own release page would not open, so this comes from a professional body’s reprint, and nothing more recent could be verified. For context, the base rate rose from 2.50% to 2.75% on 16 July 2026.
The refinancing infrastructure: since when, and for what
Online refinancing launched in 2023, starting with unsecured loans.
“You can compare loan products and terms from 53 financial companies”
“From installing the app to completing a new loan agreement takes about 15 minutes”
“Financial authorities plan to build refinancing infrastructure covering mortgages within the year” (31 May 2023)
It later extended to mortgages, and the scope widened:
“Over the 300 days from 31 May last year to the 25th of this month, 166,580 people used the loan-switching service to move a total of ₩7.4331 trillion of loans to lower rates.”
“From the 1st of next month apartment balance loans will be included, and from September villas and residential officetels with real-time valuations will be added.” (26 March 2024)
| Date | What changed |
|---|---|
| 31 May 2023 | Unsecured loans — 53 financial companies |
| 1 April 2024 | Apartment balance loans included |
| September 2024 | Villas and residential officetels planned |
The cumulative usage figure is as at 25 March 2024. Nothing later was verified.
| First 300 days (to 25 March 2024) | Figure |
|---|---|
| Users | 166,580 |
| Loans moved | ₩7.4331 trillion |
| Average per user (calculated) | about ₩44.6 million |
The per-user average is total ÷ users, not a published figure.
Prepayment fees — the rules changed in 2025
This is the variable that decides most refinancing calls. From the Financial Supervisory Service:
“A prepayment fee is the amount a consumer bears when repaying a loan before maturity. It applies for a certain period from the date the loan is extended and is applied differently by product and by timing.”
“Repaying within a set proportion (10%) of the original loan amount each year after the initial loan may be possible without a prepayment fee, or the fee may be charged differently according to the period remaining to maturity.”
“Example) repayment within 3 years: 1.5%; after 3 years: exempt”
“Converting a variable-rate mortgage to a fixed-rate loan at the same bank: prepayment fee exempt”
Two things follow:
- The 1.5% is labelled “Example)” in the source. It is not a statutory rate. Your own rate is in your loan agreement.
- Up to 10% a year may be repayable without a fee. Even if you cannot move the whole balance, partial repayment can cut the principal.
And the rules were amended in 2025:
“Financial institutions had been charging prepayment fees uniformly without specific calculation standards, but an amendment to the Supervisory Regulation on Financial Consumer Protection prohibits charging anything beyond actual costs — losses from disrupted fund operation and loan-related administrative and origination costs.”
The post-amendment rates could not be verified. The FSS page carries no date, so we cannot even tell whether the “1.5% example” predates or follows the change. Check your own agreement and your bank.
If the question is how many months it takes to earn the fee back, the months are worth counting.
DSR rules set the ceiling
Refinancing means a fresh assessment, so current rules apply in full.
“From 1 July 2025, stage-three stress DSR applies to all household loans across every sector to which DSR applies.”
“The stress rate for stage-three stress DSR is 1.50%.”
“[Variable] applies the stress rate at 100%; [mixed] at 0–80% on a sliding basis; [periodic] at 0–40%.”
| Rate type | Stress rate applied | Effect on your ceiling |
|---|---|---|
| Variable | 100% | Tightest |
| Mixed | 0–80% sliding | Middle |
| Periodic | 0–40% sliding | Loosest |
The same income produces a different ceiling depending on which rate type you refinance into. Variable takes the full stress rate. That is part of why the fixed-rate share of mortgages has reached 90.2%.
Tightened again in October 2025 — a 3.0% stress rate
That 1.50% is the figure from stage three's launch in July 2025. The Financial Services Commission raised it again afterwards, for the capital region and regulated areas only.
“Raise the stress rate on capital-region and regulated-area mortgages (1.5% → 3.0%)”
“This measure applies to mortgages extended in the capital region and regulated areas (including officetel-secured loans).”
— Financial Services Commission, Financial Policy Division, “FAQ on loan demand management measures” (15 October 2025)
Regional properties are outside this measure. And it is not retroactive — the same document states that repayments on loans already drawn before the effective date (16 October) keep the stress rate in force when that loan was made, and that “the stress rate raised by this measure (3%) does not apply retroactively.” Extending an existing loan without increasing it, or refinancing within the same bank, does not trigger a fresh DSR assessment.
Limits and LTV moved in the same package.
| Item | Change | Effective |
|---|---|---|
| Mortgage limit (home purchase, capital region / regulated areas) | Tiered by market value — ₩600M up to ₩1.5bn; ₩400M from ₩1.5bn to ₩2.5bn; ₩200M above ₩2.5bn | 16 Oct 2025 |
| LTV (first-time buyers and conditional one-home owners in regulated areas) | 70% → 40% | 7 Sep 2025 |
| Stress rate (capital region / regulated-area mortgages) | 1.5% → 3.0% | 16 Oct 2025 |
| Jeonse loan DSR (existing homeowners, capital region / regulated areas) | Applied — but on the interest portion only | 29 Oct 2025 |
“A uniform ₩600 million in the capital region” no longer holds. June 2025's flat cap was split in October into three tiers by market value. Note also that living-expense-purpose mortgages are outside this package, as are interim-payment and relocation loans (relocation loans stay at ₩600 million).
Jeonse loan DSR counts interest, not principal. “In calculating the tenant's DSR, the principal of the jeonse loan is not included; only the interest portion is reflected.” The reason is stated too — the typical two-year term would make DSR absurd otherwise. The document's own example: a borrower earning ₩50 million taking a ₩100 million two-year jeonse loan would show 100% DSR on principal repayment alone. Whether it will extend to first-time renters has not been decided.
Regional mortgages had a deferral at stage two, extended to the end of June 2026 per reporting. The position after that could not be verified — ask your bank if the property is outside the capital region.
The stress rate depends on both region and rate type. On one axis, the ranking flips.
How to decide
- Compare your rate against 4.17% — the wider the gap, the bigger the case.
- Read the prepayment clause in your agreement — rate and remaining period. The FSS 3-year / 1.5% is only an example.
- Weigh interest saved against costs — run both rates through the loan calculator and compare total interest.
- Check your DSR ceiling — a variable-rate product takes the stress rate at 100%.
- Check preferential-rate conditions — salary transfers and card usage discounts may not survive a move.
On prepayment fees specifically, see the prepayment fee guide and the prepayment fee calculator. For the market backdrop see the 2026 Korean housing market, and on the rental side, negotiating the conversion rate.
Questions people ask
Do repeated rate checks lower my credit score?
Not something we could verify against a public-agency source, so no claim is made. Treatment may differ by how the check is run — read your platform’s notice.
Do villas and officetels qualify?
March 2024 reporting says “from September, villas and residential officetels with real-time valuations will be added”. Whether that took effect, and the current scope, could not be verified.
What if I switch to fixed at the same bank?
The FSS gives the example that converting a variable-rate mortgage to fixed at the same bank is exempt from the prepayment fee. Worth asking your current bank before moving.
How much are stamp duty and registration costs?
Such costs exist, but we could not verify the amounts from a public-agency source, so none are given. Ask the bank for the all-in figure.
How does this differ from a rate-reduction request?
A rate-reduction request asks your existing bank to lower the rate because your credit improved. Refinancing moves you to another bank. Both are worth trying.
What is the LTV limit?
Region-by-region LTV ratios could not be verified from a public-agency source. The capital-region ₩600m cap was verified.
Sources and where to check
- Financial Supervisory Service, FINE portal — before you prepay. Source of the definition, the 10%-a-year exception, the “Example) within 3 years 1.5%” and the fixed-rate conversion exemption. The page carries no date.
- Korean Association of Certified Public Tax Accountants newspaper — what changes in the new year (31 December 2024). Source of the 2025 amendment prohibiting charges beyond actual cost.
- Same newspaper — November household loan rate 4.32% (29 December 2025). Source of 4.17% / 3.90% / 5.46% / 90.2% (Bank of Korea, November 2025, newly extended basis).
- Same newspaper — online refinancing launches (31 May 2023) and apartment balance loans added (26 March 2024). Source of 53 companies · 15 minutes · 166,580 users · ₩7.4331tn · the expansion schedule.
- Same newspaper — what changes in H2 2025 (16 July 2025) and the strongest lending curbs yet (27 June 2025). Source of stage-three stress DSR at 1.50%, the 100 / 0–80 / 0–40% application and the ₩600m capital-region cap.
- Financial Services Commission, Financial Policy Division — agency source — “FAQ on loan demand management measures” (posted 15 October 2025). Source for the 1.5%→3.0% stress rate on capital-region and regulated-area mortgages, the ₩600M / ₩400M / ₩200M tiered mortgage limits, the 70%→40% LTV in regulated areas, the jeonse loan DSR and its interest-only basis, the non-retroactivity and the treatment of extensions and same-bank refinancing, and the exclusion of living-expense, interim-payment and relocation loans.
Written as of July 2026. The loan rates, the refinancing infrastructure’s launch, expansion and usage, the prepayment fee structure and its 2025 amendment, stage-three stress DSR and the capital-region cap all come from the sources above, and each figure was read twice with matching results. Five things could not be verified: (1) the actual prepayment rates after the 2025 amendment (the FSS page is undated, so even the “1.5% example” cannot be placed before or after); (2) stamp duty and registration cost amounts; (3) region-by-region LTV ratios; (4) the position on regional mortgages after July 2026 (verified only that the deferral ran to end-June 2026); and (5) the effect of rate checks on credit scores. Rates and rules change often — confirm with your bank and the Financial Supervisory Service (1332). This is not financial advice.
