How it works
Monthly rent = (jeonse deposit − wolse deposit) × conversion rate ÷ 12. For example, a 200 million won jeonse turned into a 50 million won deposit at 5% a year means (200M − 50M) × 5% ÷ 12 = 625,000 won a month.
Is there a legal limit?
For an existing lease that switches from jeonse to wolse, the Housing Lease Protection Act caps the rate at the Bank of Korea base rate plus 2 percentage points (or 10%, whichever is lower). Check the current base rate on the Bank of Korea website. For a brand-new lease, the rate is whatever the market gives, often a little higher.
Which is cheaper?
If you have the cash, jeonse avoids monthly rent but ties up your money and carries the risk of a landlord not returning the deposit. Check the registry (등기부등본) and consider deposit guarantee insurance (HUG or SGI) before signing.