No conditions are set as to what the loan can be used for, except in the case of conditional authorisation for a mortgage.
Fixed interest for 60 months
fixed interest rate
Inflation-indexed mortgages have either a fixed interest rate for the entire term of the loan, or a fixed interest rate for 60 months (5 years). After each 60-month period, the interest rate is reviewed and may be altered to conform with the interest rate level current at that time.
Both mortgages with equal payments (amortised mortgages) and mortgages with equal installments on the principal are available.
If your loan carries fixed interest for 60 months you will receive a notice at least 30 days before a change is made to the interest rate, as provided for in Art. 35 of Act No. 118/2016, on Consumer Mortgages. If you take no action, the new interest rate currently offered on such loans will be fixed once more for the next 60 months.
Information on current interest terms is available on the pension fund's website. Otherwise, you have the option of converting to another type of loan at this point in time without paying a borrowing charge.
What's the difference between equal instalments and equal (amortised) payments?
If a loan is amortised, the payments you make will be equal throughout the repayment period. On the other hand, the relative amount of the installment on the principal and the interest paid will change. The principal decreases more slowly than if equal installments are paid.
For loans with equal instalments, the amount paid towards the principal in each payment is the same. The debt service is therefore greatest at the beginning, but decreases as the loan term progresses.
Frequently asked questions
For what purpose can I use the loan?
Can I pay off the loan, or make payments toward the principal?
Yes. Loans can be paid off at any time without any prepayment charge. Please include the number of the loan in the explanation/reference of payment.
Payments can be deposited in account 0515-26-010200, Reg. No. 430269-4459.
Does my spouse have to be co-borrower?
Yes, in those cases where he/she owns a share together with the borrower in the property to be mortgaged or the entire property. Your spouse must also be co-borrower if he/she is included in the credit assessment with you.
Can I take out a loan on a property which is partly owned by someone else?
If a person other than a spouse, i.e. who is married to or in a registered partnership with the borrower, is the borrower's co-owner of the property a mortgage cannot be granted for that property.
Possible consequences if obligations under a loan contract are not met
If a debtor cannot pay the loan instalments, interest or indexation on the due date, the entire loan falls due without prior notice. The debtor will have to pay penalty interest from the due date, with the rate determined by the Central Bank of Iceland, as provided for in the first paragraph of Art. 6 of Act No. 38/2001, if he/she fails to make payment on time, in addition to all the costs resulting from the default.
The final result could be that your home would have to be sold at forced auction if you fail to make your payments.