Exiting a Korean Home Pension is more than returning the payments received
A voluntary Home Pension termination generally starts with a current settlement figure from the Korea Housing Finance Corporation or the servicing financial institution. The subscriber repays the full current loan balance and completes the collateral-release procedure. That balance can include monthly pension payments, individual withdrawals, the initial and annual guarantee fees, and accrued loan interest. Adding the monthly payments alone will therefore understate the cash required to exit.
This calculator compares three choices on a common present-value basis: continue receiving Home Pension, terminate and retain the home, or terminate and sell now. It projects one, five, and ten years, shows immediate settlement cash, estimates a residence-period break-even point, and derives a minimum sale price that would match the continue path. It is a planning worksheet for an HF consultation and family decision, not a termination approval, valuation, tax return, or recommendation to transact.
If moving is the objective, ask HF about changing the collateral home before requesting termination. HF guidance describes a route that may preserve the agreement with approval, although a change can be unavailable or can alter the monthly payment depending on the replacement property and the contract. Obtain case-specific guidance before treating exit as the only route.
What the three paths include
Comparison of continuing, exiting and retaining, and exiting and selling a Korean reverse mortgage| Path | Cash-flow treatment | Asset at the horizon | Common omission |
|---|
| Continue Home Pension | Monthly pension inflow less ownership costs | Projected home value less projected balance | Compounding interest, annual guarantee fee, repairs |
| Exit and retain | Settlement, release, and funding cost paid now | Projected unencumbered home value | Cash gap, new borrowing cost, continuing upkeep |
| Exit and sell now | Sale proceeds less settlement and closing costs | Immediate net cash less replacement-housing cost | Achievable price, tax, rent or replacement debt |
The paths move money at different dates, so nominal totals are not directly comparable. The calculator discounts future monthly flows and terminal values to today. A higher discount rate reduces the weight of distant pension payments and future home value. A higher home-growth assumption raises both home-retention paths. Run downside, base, and upside cases instead of relying on one forecast.
Build a dated evidence pack before comparing
The six evidence checks are a decision gate, not decoration. The calculator will display arithmetic with estimates, but it will not name a five-year leader until every check is complete. This keeps an unverified refund, portal asking price, or reconstructed account balance from being presented to the family as a settled fact.
Obtain from HF or the lender
- A dated current settlement balance
- The actual guarantee-fee refund or adjustment
- The currently applied loan and annual guarantee-fee rates
- The payment account, collateral-release sequence, documents, and charges
- The same-home re-enrollment restriction and any case-specific exception
- Alternatives such as changing the collateral home
Confirm with brokers, family, and advisers
- An achievable sale price supported by completed transactions
- Brokerage, legal, release, repair, clearing, and moving costs
- Tax reviewed for each path by a qualified Korean adviser
- Rent, management charges, or replacement-home borrowing after sale
- Cash available after preserving emergency and living reserves
- Housing stability, health, care access, and the family's minimum residence period
How to use the calculator
- Enter the HF-confirmed account facts first.
Use the current balance, monthly payment, initial guarantee fee, elapsed whole months, and the actual refund stated by HF. If the refund is not yet available, leave it at zero, leave its evidence box unchecked, and treat the result as provisional.
- Match the continuation assumptions to the contract.
Replace the rate fields with the currently applied loan rate and annual guarantee-fee rate. Enter realistic ownership costs. Test more than one home-value change and discount-rate assumption because these inputs can reverse the ranking.
- Measure the cash strain of exiting and retaining.
The calculator adds release cost to the net settlement and subtracts immediately available cash. It applies simple interest to the funding gap for comparison. Obtain a real amortization schedule, fees, security requirements, and repayment conditions before borrowing.
- Use a supportable transaction price for the sale path.
Do not enter a single asking price. Include brokerage, legal and release work, confirmed tax, repairs or clearing, moving, and the new monthly housing cost after sale.
- Read horizons and break-even together.
The five-year leader is only one view. Compare the projected balance, terminal equity, and minimum sale price at one, five, and ten years. The break-even month is the first modeled month when continuing reaches or exceeds selling, not a promise about how long the subscriber can or should remain.
- Complete the evidence gate and review as a family.
Save the result with its input date. Discuss housing security, a spouse's needs, health, care, moving burden, liquidity, and estate intent alongside the modeled values. A small numerical lead may not outweigh those non-financial constraints.
Core formulas and their limits
Net settlement on exit
Applied refund is the lesser of the HF-confirmed refund and current balance. Net settlement equals the current balance less that applied refund. Capping the refund prevents an accidental over-entry from creating a negative settlement, but it does not validate the refund.
Initial-fee refund reference
The straight-line reference is initial fee multiplied by remaining reference months and divided by 60. It becomes zero after month 60. This is only a reasonableness check because actual HF treatment can depend on agreement, first-payment, settlement, and fee dates and on which fee amounts are refundable.
Projected continuation balance
Each modeled month adds loan interest to the prior balance, then adds the monthly pension payment, then applies the monthly equivalent of the annual guarantee-fee rate. Actual statements can differ because of day-count conventions, rate reset dates, disbursement timing, and won-level rounding.
Present value by path
Continue value combines discounted terminal home equity with discounted monthly pension less ownership costs. Exit-and-retain value uses discounted future home value less settlement, release, simple funding cost, and discounted ownership costs. Exit-and-sell value uses immediate net sale cash less discounted replacement-housing costs.
Do not substitute the reference refund or assume quick re-enrollment
HF's current termination FAQ distinguishes withdrawal within the agreement-withdrawal period from a later partial refund of the initial guarantee fee and also describes adjustment of annual guarantee fees when the guarantee relationship ends. A public description is not enough to reproduce one subscriber's won-level refund, so the calculator always uses the separately entered HF-confirmed figure in the settlement result.
The FAQ also describes a general three-year restriction on using the same home for re-enrollment after termination, with a price-and-payment-method-related exception. The exception requires HF's case-specific determination. Do not build a plan around exiting now and promptly re-enrolling later without written confirmation.
Worked synthetic example
Consider a fictional household with a current HF balance of KRW 180,000,000, a KRW 900,000 monthly payment, a KRW 500,000,000 home value, a KRW 5,000,000 initial guarantee fee, 24 elapsed months, and a KRW 3,000,000 refund confirmed by HF. Assume a 4% annual loan rate, 0.95% annual guarantee-fee rate, 1% annual home appreciation, 3% discount rate, and KRW 250,000 monthly ownership cost.
For the exit paths, assume KRW 1,500,000 of release cost and KRW 100,000,000 of available cash. Finance any gap for 60 months at 5% simple annual interest. The expected sale price is KRW 490,000,000, sale cost is KRW 12,000,000, moving cost is KRW 5,000,000, and replacement housing costs KRW 1,200,000 per month.
The diagnostic refund reference and confirmed refund are both KRW 3,000,000, producing a KRW 177,000,000 net settlement. Retaining the home after exit requires KRW 178,500,000 including release cost. The funding gap is KRW 78,500,000 and its modeled five-year simple interest is KRW 19,625,000. Selling now leaves KRW 294,500,000 of immediate net cash before future replacement-housing costs.
At five years, modeled present value is about KRW 237,938,016 for continuing, KRW 241,253,225 for exiting and retaining, and KRW 227,650,274 for exiting and selling. The small lead for exit-and-retain is not an instruction to terminate. Tax, a real amortizing loan, a lower home value, or the household's inability to absorb the cash gap can reverse or outweigh it. The Load synthetic example button is a calculation check and teaching case, not a national average or a typical subscriber profile.
Frequently asked questions
Does a home sale automatically settle Home Pension?
Confirm the settlement account, release sequence, documents, and closing-date balance with HF and the servicing institution before signing or closing. The balance and refund can change between the calculation date and the transaction date.
Can I use the calculator's 60-month refund reference as my refund?
No. It is a straight-line diagnostic only. The settlement calculation applies the separate refund amount confirmed by HF, and the evidence gate remains incomplete until that amount is checked.
Does negative modeled equity mean an immediate personal repayment obligation?
No. It means the projected balance exceeds the projected home value under the entered assumptions. The Korea Housing Finance Corporation Act contains a collateral-claim rule and statutory exceptions. The calculator deliberately does not decide legal liability or cap a living subscriber's voluntary settlement; obtain case-specific HF and legal guidance.
Is the highest five-year present value always the right choice?
No. Secure lifetime occupancy, a spouse's health, access to care, moving stress, emergency liquidity, family agreements, and estate goals are not fully captured by a financial model. Review the margin between paths and test whether it survives conservative assumptions.
Official references and final checks
The model was prepared from the Korea Housing Finance Corporation Act and Enforcement Decree provisions on explanation duties, claim scope, guarantee events, and guarantee fees, together with HF's current termination FAQ, program-cost page, and subscriber guidance. Public sources were checked on September 3, 2026, but account figures, rates, documents, and approval conditions remain contract-specific.
The current Korea Housing Finance Corporation Act is law ID 009591, master sequence 277275. Article 43-2 addresses explanations of payment, repayment, collateral, claim scope, and fees; Article 43-4 addresses the collateral-claim rule and its exceptions; and Article 43-8 provides the guarantee-fee basis. The Enforcement Decree is law ID 009656, master sequence 281389. Article 28-2 addresses guarantee-claim events and Article 28-7 addresses guarantee-fee setting. The Article 43-4 rule is not used here to cap a living subscriber's voluntary termination payment at modeled home value. The calculator instead starts from the full current balance confirmed by HF and subtracts only the confirmed refund.
Obtain dated HF balance and refund guidance, a supported transaction estimate, and a complete cost list. Recalculate after all six evidence checks are complete, review the output with the family, and obtain individual tax, legal, finance, and HF advice before terminating or signing a sale.