Mortgage Refinancing Complete Guide 2026: Rate Comparison, Process & Costs

With interest rates fluctuating in 2026, mortgage refinancing (주담대 갈아타기) demand has surged in Korea. If you locked in a mortgage at 5–7% during the rate hike cycle, refinancing to a lower rate could save you millions of won over the remaining loan term. This guide walks you through every step—from checking eligibility to calculating whether refinancing actually saves you money after fees.

What Is Mortgage Refinancing?

Mortgage refinancing means paying off your existing home loan by taking out a new loan at a lower interest rate from a different (or the same) lender. In Korea, this is commonly called 대환대출 or 갈아타기. The goal is simple: reduce your monthly payment and total interest cost. However, the process involves fees—prepayment penalties, appraisal costs, stamp duty, and registration fees—so you need to calculate whether the savings outweigh the costs.

Eligibility Requirements

• LTV (Loan-to-Value): Your new loan amount must stay within current LTV limits. As of 2026, regulated areas allow up to 50% LTV, non-regulated areas up to 70%. If your property value has increased, you may qualify for better terms.
• DTI (Debt-to-Income): Total annual debt payments must not exceed 40–60% of your annual income, depending on the region and loan type.
• Credit Score: A NICE (NCB) credit score of 700+ is generally required for competitive rates. Scores above 800 unlock the best offers.
• Income Verification: Stable income proof is required—payslips, tax returns, or business income statements for self-employed borrowers.
• Existing Loan Status: Your current mortgage must be in good standing with no delinquencies in the past 12 months.

Step-by-Step Refinancing Process

• Step 1 – Compare Rates: Use online comparison tools and bank websites to compare current mortgage rates. Check both fixed and variable options. The Bank of Korea base rate and individual bank spreads determine your offered rate.
• Step 2 – Consultation: Contact 2–3 banks for detailed quotes. Ask about rate, fees, lock-in period, and any special promotions. Internet-only banks (Toss Bank, Kakao Bank) often offer 0.1–0.3% lower rates.
• Step 3 – Application & Appraisal: Submit your application with required documents. The bank will order a property appraisal to confirm current market value and calculate LTV.
• Step 4 – Approval & Existing Loan Payoff: Once approved, the new lender pays off your existing mortgage directly. The old mortgage is discharged and the new one is registered.
• Step 5 – New Loan Execution: The new mortgage takes effect. Your first payment begins the following month at the new, lower rate.

Cost Breakdown

• Prepayment Penalty (중도상환수수료): Typically 1.0–1.5% of remaining balance, decreasing over 3 years. After 3 years, most penalties drop to zero. Calculate this carefully—it's usually the largest cost.
• Appraisal Fee (감정평가비): 300,000–500,000 won depending on property type and value.
• Stamp Duty (인지세): 150,000–350,000 won based on loan amount.
• Registration Fee (등기비): Approximately 0.2% of loan amount for mortgage registration transfer.
• Miscellaneous: Document issuance fees, attorney fees for registration (약 200,000–400,000 won).

Fixed vs Variable vs Hybrid Rates

• Fixed Rate (고정금리): Rate stays the same for the entire loan term. Best when rates are low and expected to rise. Currently 3.5–4.5% for 20–30 year terms.
• Variable Rate (변동금리): Rate adjusts every 3–6 months based on COFIX or CD rate. Currently 3.0–4.0%. Lower initial rate but carries risk if rates rise.
• Hybrid/Mixed Rate (혼합금리): Fixed for the first 3–5 years, then switches to variable. Currently the most popular option in Korea at 3.2–4.2%. Offers initial stability with potential savings.

When refinancing, consider your remaining loan term. If you have 20+ years left, a fixed rate provides long-term certainty. If you plan to sell within 5 years, a variable rate with lower initial payments may be more cost-effective.