Inflation-indexed housing loan

Inflation-indexed housing loans carry floating interest rates for a long term and are suited to customers who want favourable loans with low interest. Mortgages are available for the purchase of real estate, refinancing of loans, new construction or housing improvement purposes. They are granted as first mortgages on real estate.

Term of loan

  • The loan has a 40-year term.
  • A supplementary loan is an amortised loan for a maximum period of 15 years.

Loan percentage

  • The maximum loan amount is up to 70% of the property's market value or valuation and a supplementary loan can be taken out to finance up to 85%.
  • The lending percentage cannot exceed the combined fire insurance assessment value and plot value of residential housing.
  • Minimum housing loan is ISK 1 million.

Instalments

  • Instalments are made monthly and the applicant can select the day of the month.
  • Either annuity payments or monthly equal instalments on the principal.
  • Repayment of supplementary loans is in the form of monthly equal instalments on the principal.

Interest

Fees

  • A stamp duty of 1.5% goes to the national treasury (no stamp duty is charged on the first real estate purchased).
  • Until 31 December 2011 (according to law) no stamp duty is charged on refinancing of housing loans. No stamp duty is charged on the tranche of the new loan comparable to the recalculated value of the older loan, plus default.
  • the case of refinancing, only half the stamp duty is charged, or 0.75%.
  • Fee for registration accrues to the national treasury.
  • Borrowing charge of 1%.
  • Other fees as per the bank's current tariff. No excess payment fee.

More favourable terms for first-time real estate purchases

Borrowers purchasing their first housing and who service their debt promptly get yearly refunds from the bank at the end of each year for a period of three years. The refund amounts to 25 points of paid interest on the loan and is payable to the borrower's account for debit.

Are you a member of Varðan?

  • Members of Varðan are charged a lower borrowing charge, or 0.5%.
  • They are also rewarded ISK 5,000 in ExtraChange, if they collect ExtraChange.

Other information

  • The borrower must pass credit assessment.
  • Transfer of pledge is allowed.

Loans