What Is Jeonse and How Does It Work?
Jeonse is a unique Korean rental system where a tenant pays a large lump-sum deposit โ typically 60โ80% of the property's value โ to the landlord for the lease period (usually 2 years). Instead of monthly rent, the landlord earns interest by investing or using the deposit. At the end of the lease, the deposit is returned in full.
Jeonse Loan Interest Formula
Monthly Interest = Loan Amount ร Annual Rate รท 12
Since jeonse loans are interest-only (balloon structure), tenants pay only interest each month and repay the principal when they move out. For example, a $150,000 loan at 4.5% annual rate costs $562.50/month in interest, totaling $13,500 over a 2-year lease.
Jeonse vs. Monthly Rent
Jeonse is financially attractive when the monthly loan interest is lower than comparable monthly rent. As interest rates rise, jeonse becomes less competitive compared to monthly rent. This calculator helps you determine your break-even point.
Frequently Asked Questions
Jeonse is a uniquely Korean institution. Similar deposit-heavy rental systems exist in some parts of the world, but the pure jeonse model is specific to Korea's housing market.
In a jeonse loan, the principal (the full deposit amount) is repaid when the lease ends, usually after 2 years. Tenants often roll over into a new jeonse when moving to a new property.
Yes. This calculator works for any interest-only (bullet) loan structure โ just enter the principal, rate, and term to see your monthly and total interest cost.