Jeonse vs Semi-Jeonse: Which Is Cheaper Over 5 Years?
Jeonse is a Korean lease structure where a tenant hands over a large lump-sum deposit and pays no monthly rent for the contract term. Semi-Jeonse lowers that deposit but adds a monthly rent payment. Semi-Jeonse looks cheaper upfront, but a fair comparison must account for the opportunity cost of the deposit — the interest you'd earn if that money sat in a bank instead.
For example, with a Jeonse deposit of $250,000, a semi-Jeonse deposit of $125,000, and $400 monthly rent, at a 3.5% annual rate the 5-year opportunity cost of Jeonse is about $43,750. Semi-Jeonse costs about $21,875 in opportunity cost plus $24,000 in rent over 5 years, totaling roughly $45,875. In this case, Jeonse comes out slightly ahead.
The result shifts significantly with interest rates and rent levels. Higher interest rates increase the Jeonse deposit's opportunity cost, favoring semi-Jeonse, while higher rent favors full Jeonse. Plug in your own numbers before signing to see which option truly saves you money.
Frequently Asked Questions
It depends on the deposit interest rate and the monthly rent. A higher interest rate raises the opportunity cost of a Jeonse deposit, favoring semi-Jeonse, while higher rent favors full Jeonse. Enter your own numbers to compare.
It's the interest income you would have earned by keeping the deposit in a bank instead of handing it to the landlord. Jeonse locks up a large deposit but has no monthly rent, while semi-Jeonse ties up less cash but adds monthly rent.
Yes, just change the residence period field to the number of years you want and the totals recalculate automatically. Real-world rate changes and deposit increases at renewal are not included.