How Money Flows in Jeonse and Monthly Rent
Jeonse is a contract in which you place a large deposit and generally do not pay monthly rent. With monthly rent, you pay a smaller deposit along with rent each month. In either case, the deposit is money entrusted to the landlord, so you should confirm that it can be returned when the contract ends.
Use the Same Period for Comparison
If you are comparing a two-year contract, add 24 months of rent and calculate the opportunity cost of the deposits tied up in each option. If you have a loan, include interest and guarantee fees as well. Since future investment returns are unknown, it is better to use a conservative benchmark such as a deposit interest rate and also consider a loss scenario rather than assuming a high return.
The Key Risks of Jeonse
Jeonse has the advantage of no monthly rent, but the deposit is large, and if the landlord cannot return it on time, it can cause serious disruption to your life. Before signing, check the owner and senior claims on the property register, and compare nearby sale prices with actual jeonse transaction prices. Deposit return guarantees have eligibility requirements involving the deposit amount and property value, so check them in advance.
Monthly Rent Deposits Also Need to Be Checked
Monthly rent requires a relatively smaller lump sum, which may make it easier to respond to a move or changes in income. However, it creates a fixed monthly expense, and the terms may change when you renew the contract. A monthly rental deposit is also money that must be returned, so do not skip basic procedures such as checking the property register, registering your move-in, and obtaining a fixed date.
How to Choose Based on Your Situation
If the cost difference is small, give greater weight to the emergency fund left after preparing the deposit, the likelihood of moving, and the stability of your income. Even if jeonse appears cheaper, it may not be a good choice if it leaves you with almost no emergency funds or if obtaining a guarantee is difficult. Conversely, if you plan to live there for a long time and have checked the ownership rights and guarantee requirements, jeonse may result in lower monthly expenses.