Costs to Include in the Comparison
For jeonse, include loan interest, the deposit-return guarantee fee, and the opportunity cost of your own funds. For monthly rent, include rent and the opportunity cost of the deposit. For costs shared by both options, such as brokerage fees and moving expenses, reflect the difference only when the contract periods are different. A deposit is money you receive back when the contract ends, but there is still a risk that it may not be returned, as well as the cost of being unable to use it during that time.
What to Check Before the Loan Product Name
Policy loans, bank jeonse loans, and guarantees from guarantee institutions are not the same product. Eligibility income, property price, deposit, guarantee ratio, and interest rates may vary at the time of application. Instead of relying on the lowest rate advertised, check the actual approved limit, applicable interest rate, guarantee fee, and early repayment terms in the bank’s product disclosure.
Calculate Using the Same Conditions
For example, if you plan to live there for two years, set both options to 24 months. For a jeonse loan, calculate interest by multiplying the amount actually borrowed by the applicable rate, and list a separate scenario for a rate increase if the loan has a variable rate. For monthly rent, add 24 months of rent. Calculate the opportunity cost of the deposit difference between jeonse and monthly rent using a realistic benchmark, such as a safe deposit interest rate, rather than treating investment returns as guaranteed money.
For Jeonse, the Possibility of Deposit Recovery Is Also a Cost
Your deposit does not automatically come back just because the jeonse contract ends. Before signing, check the owner and senior claims in the property registry, and make sure the deposit and senior claims are not excessively large compared with the property value. HUG deposit-return guarantees have regional deposit limits and loan-to-value criteria based on the property value, so it is safer to confirm eligibility before paying the contract deposit.
What You Miss When You Look Only at the Monthly Payment
With a jeonse loan, you need to consider rising interest rates and loan-extension reviews; with monthly rent, consider changes in rent and the deposit at renewal. For people who may move soon or have significant income fluctuations, a contract with a smaller deposit may reduce the burden even if it costs slightly more. Conversely, if you plan to live in the same home for a long time, it is worth assessing whether you can handle the loan interest and deposit-related risks.
What to Check Before Signing the Contract
First, ask the bank for the expected loan limit and interest rate. Then check the property registry, market value, and eligibility for deposit-return insurance. Consider adding a special clause stating that the contract deposit will be returned if the loan or guarantee is rejected. After moving in, do not delay procedures that establish opposability and priority repayment rights, such as resident registration and obtaining a confirmed date.