Hybrid Mortgage

You can choose the indexed and non-indexed route with a hybrid mortgage. You decide the ratio and enjoy the benefits of both.

Next step

You can apply for hybrid mortgages in minutes (in Icelandic)

How does a Hybrid Mortgage work?

  • You can divide the loan amount into two or more loan types. This gives you the option of creating an indexed, non-indexed ratio to suit your needs.

  • You can mix and match a Hybrid Mortgage so that part of the loan is fixed rate and part of it is variable rate.

  • A mortgage covering 70% of your property value can be paid over a 40 year period and an additional mortgage covering up to 80% can be paid over a period of 25 years.

  • The additional mortgage can be variable non-indexed, fixed rate non-indexed or indexed.

Advantages and disadvantages

Compare the advantages and disadvantages of a Hybrid Mortgage.



The stable payments on the indexed part of the mortgage can make up for any fluctuations on the non-indexed part of the loan.

Higher administration costs because of the various types of loan on offer. This can include extra documentation and registration costs.

Payments on indexed loans are generally lower initially but increase with time. The opposite is true regarding payments on non-indexed loans which are higher to begin with and decrease with time.

Two or more different payment plans can create a complicated monthly repayment process.

Choosing a combination of fixed and variable rates offers you the advantage of distributing risk.

Lending amount

We can lend you up to 70% of the value of the property you want to purchase, although you can also apply for an additional mortgage which would bring the total to 80%.

We offer the following additional loans:

  • Variable non-indexed rates
  • Non-indexed fixed rate reviewed every 3-5 years
  • Variable indexed rate
  • Indexed fixed rate reviewed every 5 years

The minimum loan amount is ISK 1 million and the maximum loan amount is ISK 60 million.

Lending period and fees

The mortgage lending period ranges from 5 to 40 years and you can also apply for an additional mortgage with a 25 year lending period.

You can choose between even payments on the principle amount and even payments.

Mortgage fees

  • The standard mortgage fee is ISK 59,000 but there is no fee for first time buyers.
  • Registration fee
  • Mortgage issuance fee
  • Credit evaluation fee
  • Lien check fee
  • Loan overview fee


What is prepayment?

You can prepay your mortgage or pay more towards your mortgage whenever you like but you might have to pay a fee.

Do I need to pay a prepayment fee?

Fixed rate mortgages charge a prepayment fee if the amount is paid during the fixed rate period. There is no fee for variable rate mortgages. The fee is charged in accordance with the bank's price list each time.

You can pay an additional ISK 1 million towards your fixed rate mortgage every year without paying a fee

Non-indexed loans are converted to variable interest rate loans at the end of the fixed interest period, and the prepayment fee is waived.

Can I apply for a mortgage?

  • Individuals intending to buy or refinance a home for own use can apply
  • Íslandsbánki will have first lien position or equal lien on the property
  • The financial status of the applicant and property price are considered each time
  • Each applicant must successfully complete a credit evaluation