Compare keeping a Korean senior mortgage and adding a second lien with refinancing the full balance, including 1-, 3-, and 5-year finance cost, cash outflow, break-even timing, and collateral stress.
The entered LTV is a lender-confirmed planning assumption, not an approval threshold.
Appraised value or planning estimate
70% is an editable fictional example.
Include all secured balances and claims ranking ahead of the proposed second lien.
Enter the proposed second-lien terms and borrower-paid setup costs.
Confirmed appraisal, stamp, legal, registration, and origination costs
The new principal equals senior balance plus additional funds. Use the lender payoff quote and actual cost estimates.
Enter the contract rate.
Capped at 36 months under the general statutory boundary
Second-lien and refinance summary
Second-lien capacity
₩260,000,000
Within entered LTV
Balance-weighted blended rate
5.0%
Not a hybrid product rate or APR
Refinance initial payment difference
-₩500,619
Refinance payment minus keep-and-add payment
Five-year refinance benefit
+₩1,845,421
Positive means lower refinance finance cost
Rates, LTV, and costs are fictional examples or user inputs. Results are not approval, product advice, or legal or tax conclusions.
Keep-and-add initial payment
₩3,031,217
Senior plus second lien
Refinance initial payment
₩2,530,598
New loan on combined principal
Keep-and-add upfront costs
₩2,000,000
Refinance upfront costs
₩5,000,000
Includes estimated prepayment fee of ₩1,500,000
Combined LTV
50.0%
Senior plus additional funds divided by collateral value
Combined secured balance
₩400,000,000
| Horizon | Keep-and-add finance cost | Refinance finance cost | Refinance benefit | Keep-and-add cash outflow | Refinance cash outflow | Refinance ending balance |
|---|---|---|---|---|---|---|
| 1 year | ₩21,572,105 | ₩22,741,712 | -₩1,169,607 | ₩38,374,603 | ₩35,367,170 | ₩387,374,542 |
| 3 years | ₩57,736,433 | ₩56,458,455 | +₩1,277,978 | ₩111,123,810 | ₩96,101,510 | ₩360,356,945 |
| 5 years | ₩89,481,233 | ₩87,635,812 | +₩1,845,421 | ₩183,873,016 | ₩156,835,850 | ₩330,799,962 |
Finance cost is interest plus upfront costs; cash outflow also includes principal. Principal reduces debt rather than creating an economic cost, so the measures stay separate.
First refinance break-even
Month 22
Cumulative interest plus upfront costs
First refinance advantage ends
Month 85
Sustained break-even
None
First month after which refinance stays cheaper through maturity
Lifetime refinance benefit
-₩28,444,451
Keep-and-add lifetime finance cost is lower
Keep-and-add lifetime finance cost
₩183,898,950
240-month schedule
Refinance lifetime finance cost
₩212,343,401
240-month schedule
| Value decline | Stressed value | Combined LTV | Second-lien capacity | Headroom after request | Status |
|---|---|---|---|---|---|
| 0% | ₩800,000,000 | 50.0% | ₩260,000,000 | +₩160,000,000 | Within assumption |
| 10% | ₩720,000,000 | 55.56% | ₩204,000,000 | +₩104,000,000 | Within assumption |
| 20% | ₩640,000,000 | 62.5% | ₩148,000,000 | +₩48,000,000 | Within assumption |
| 30% | ₩560,000,000 | 71.43% | ₩92,000,000 | -₩8,000,000 | Above assumption |
Korea Financial Consumer Protection Act Article 20 generally limits prepayment charges to repayment within three years of contract formation, while Supervisory Regulation Article 14, effective April 2, 2026, prohibits improper additions beyond recognized loan-contract costs. Banking Supervision Regulation Article 29-2 and Annex 6 govern LTV, DSR, and mortgage handling but do not create one approval LTV for every second lien. Use the contract, payoff quote, appraisal, and lender review.
A second-lien strategy keeps the existing senior mortgage and borrows only the additional cash behind it.
That can preserve a low senior rate or a short remaining term, but the new junior rate and setup costs change the economics of the combined debt.
A full refinance replaces the senior balance and the additional cash need with one new loan; it may lower the initial monthly payment while increasing lifetime interest through a longer term.
This calculator builds monthly amortization schedules for both strategies and separates interest plus upfront costs from principal-inclusive cash outflow.
It compares the first 1, 3, and 5 years as well as the full scheduled life, and it tracks when refinancing first becomes cheaper, when that initial advantage ends, and whether an advantage lasts through the remaining comparison period.
A collateral stress table also shows the buffer after value declines of 0%, 10%, 20%, and 30%.
The entered collateral-recognition ratio and rates are scenario assumptions, not statutory limits or lender approval standards.
Actual capacity depends on location, home ownership, lien priority, registered maximum secured amount, income and DSR review, and the lender’s underwriting policy.
The displayed blended rate is a balance-weighted nominal rate for the senior and junior loans; it is neither a fixed-variable hybrid product rate nor an annual percentage rate that includes fees.
| Item | Strategy A: add a second lien | Strategy B: full refinance |
|---|---|---|
| Debt structure | Keep the senior balance and add junior financing | Replace the senior balance and cash need with one loan |
| Upfront costs | Entered junior-lien setup, appraisal, and handling costs | New-loan costs, senior discharge costs, and estimated prepayment fee |
| Potential strength | Preserve an inexpensive senior rate and its remaining amortization | Simplify payments and possibly lower initial monthly outflow |
| Main caution | Higher junior rate, two creditors, and reduced collateral buffer | Term-extension interest and refinance transaction costs |
Both strategies begin with the same economic principal: the existing senior balance plus the additional cash required.
Their outcomes diverge because of rates, repayment methods, remaining terms, the new term, and upfront costs.
A lower monthly payment alone does not prove that refinancing is cheaper, so compare finance cost and remaining balance over the same planned holding period.
Recognized collateral capacity equals property value multiplied by the entered recognition ratio.
Available junior capacity equals that recognized amount minus the senior balance, floored at zero.
The calculator warns when the requested additional cash exceeds this scenario buffer.
Add senior balance × senior rate and additional cash × junior rate, then divide by total principal.
Different terms and amortization speeds are not captured by this single rate, so the monthly schedules remain the controlling comparison.
Do not interpret it as an effective annual cost including fees.
Finance cost equals interest paid during the horizon plus entered upfront costs.
Cash outflow adds principal payments to that finance cost.
Separating the two prevents slow principal repayment from looking like a genuine cost saving.
Refinance benefit equals Strategy A cumulative finance cost minus Strategy B cumulative finance cost.
A positive amount favors refinancing at that month, while a negative amount favors adding the second lien.
Because a refinance may win temporarily and then lose through term extension, the calculator reports the first break-even, the end of the first advantage window, and a sustained break-even separately.
The calculator multiplies the senior balance by the entered fee rate and the remaining fraction of the charge window.
The remaining fraction is entered charge months minus elapsed months, divided by charge months, and the input is capped at 36 months.
If elapsed months are equal to or greater than the charge window, the estimate is zero.
With a KRW 300 million senior balance, a 1% entered fee, a 36-month charge window, and 18 elapsed months, the remaining fraction is 50%.
The simple estimate is KRW 300 million × 1% × 50% = KRW 1.5 million.
Actual contracts may apply daily reduction, annual partial-payment exemptions, product-specific waivers, or refinance promotions, so the lender’s dated payoff statement controls.
If the senior rate is materially below the refinance rate and has a short remaining term, accepting a higher junior rate can still produce lower lifetime interest.
Monthly outflow may be higher, so check the first-year cash figure against household repayment capacity.
Cumulative finance cost and remaining balance at the likely sale date matter more than a 20- or 30-year lifetime total.
When first break-even occurs after the expected sale, refinance setup costs may never be recovered.
Extending the refinance term can lower the first payment while slowing principal reduction and raising lifetime interest.
If cash-flow stability rather than cost minimization is the objective, state that objective explicitly and model a later voluntary principal payment separately.
A negative stress buffer means total principal exceeds the entered recognition-ratio capacity under that value decline.
It is a sensitivity indicator, not a prediction that a lender will immediately accelerate the debt.
Article 20(1)4(b) of the Financial Consumer Protection Act frames the permitted early-repayment-fee period generally around repayments made within three years after contract formation, subject to its stated exceptions.
Article 14(6)9 of the Supervisory Regulation under that Act restricts improper added charges beyond recognized costs, including funding opportunity costs and loan-related administrative or origination costs.
Article 29-2 and Annex 6 of the Regulation on Supervision of Banking Business provide the framework for Korean mortgage handling and LTV, DTI, and DSR controls; this calculator therefore does not hard-code one nationwide second-lien LTV.
Articles 3 and 6(8) of the Stamp Tax Act can apply to loan documents and provide a non-taxable scope for loan documents of KRW 50 million or less, but the calculator does not auto-add stamp tax because the instrument and cost allocation must be confirmed.
No.
Terms, amortization methods, upfront costs, and the holding horizon can make cash outflow or finance cost higher even when the weighted nominal rate is lower.
A refinance can begin behind because of setup costs, move ahead through lower monthly interest, and then fall behind again as an extended term accumulates interest.
Separate milestones reveal whether the advantage is temporary or continues to the end of the comparison.
No.
It only means the entered charge window has elapsed; confirm the contract date, proposed payoff date, exemptions, partial repayments, and the lender’s official payoff amount.
Match the lender proposal: equal total payment, equal principal, or interest-only with a balloon at maturity.
For structures not modeled here, such as an interest-only grace period followed by amortization or periodic variable-rate resets, prioritize the lender’s formal schedule and run conservative segments separately.
Executable proceeds and costs can change with the registered maximum secured amount, lien priority, appraisal method, and lender underwriting.
After identifying a preferred strategy, ask each lender for a schedule using the same principal, repayment method, and intended funding date, including every upfront charge.
Re-run a conservative case with rates 0.5 percentage points higher and property value 20% lower to see how much room remains under adverse conditions.
This result is an informational estimate and does not constitute lending approval, legal, tax, investment, or lender-specific advice.