Understanding a Keun Mortgage in Korea

If you’re renting a property in Korea using the lump-sum deposit system (jeonse), you may come across the term Keun Mortgage. This isn’t always required, but many tenants choose it because it helps secure their deposit against potential risks. A Keun Mortgage is essentially a lien registered on the property for the full amount of your rental deposit. It serves as protection in three main scenarios:

1. Landlord insolvency or property transfer – If the landlord goes bankrupt or sells the property, the registered Keun Mortgage ensures the tenant can continue living in the property under the original lease terms until the contract ends.
2. Early termination by the tenant – If the tenant ends the lease early under a diplomatic or early termination clause, the Keun Mortgage holds the refundable deposit. It won’t be canceled until the landlord returns the remaining balance. Once the refund is made, the Keun Mortgage is released.
3. Costs Involved – Setting up a Keun Mortgage generally costs about 1.5% of the rental deposit. This covers taxes, agent fees, and most significantly, the purchase of a national housing bond, which accounts for about 1% of the total deposit.

There are two ways to handle these bonds: • Immediate sale – Sell the bond back to a bank right away at around 80% of its value, with the proceeds refunded to the tenant.
• Long-term holding – Keep the bond for five years and redeem it at full value plus about 4% annual interest. Registration & Deregistration
The Keun Mortgage is registered when the deposit is paid and stays in place throughout the lease. At the end of the lease, once the deposit is refunded, the Keun Mortgage is canceled.