The government has rolled out comprehensive new measures to curb the growth of household debt.
 
The key to the set of measures announced Tuesday is to ensure people can only borrow as much as they are able pay back.
 
To prevent speculative real estate transactions, the ceiling on second home mortgage loans will be further tightened from next year.
 
A new debt-to-income ratio(DTI) will be introduced in January. The new method will reflect the amount of principal repayment in existing mortgage loans when the borrower takes out another mortgage.
 
Also starting August 2018, an individual's total debt will be managed in a more comprehensive manner. 

Financial institutions will adopt a new restriction called the debt service ratio(DSR) as an indicator to their risk management. This means deliberations on mortgage loans will be more in-depth, taking into account an applicant's other loans and overdrafts.
 
With these measures, the government aims for about eight percent annual growth in household debt.
 
However, support will increase for low-income households and owners of small businesses who are struggling to pay off their debts. For those who can't keep up with repayments, a maximum three-year grace period will be granted on the payment of the principal. 
 
The spread on the overdue payment will also be lowered to the three to five percent range.
 
A debt exemption will also be sought for some 400-thousand people who have failed to pay back loans of less than ten million won for more than ten years.