How does an Indexed Mortgage work?

  • Payments are initially lower because part of the financing costs are added to the principal amount but paid in full during the loan period
  • You generally pay off your mortgage at a slower rate
  • You can choose between a mortgage with a variable rate or a mortgage with a fixed rate during the first five years
  • 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 lowest mortgage amount is 1 million ISK and the highest is 60 million ISK
  • You can either pay the same amount each month or pay less to begin with

Two types of Indexed Mortgages


You can choose between a variable interest rate, based on the bank's interest rate table, or a fixed interest rate for the first five years.

Variable rate

5 year fixed rate

Payments vary according to the interest rate each time

Payments are stable

Interest rates depend on the bank's financing costs and market conditions

Interest rate is reviewed every 5 years

Pay off the mortgage without paying any fees

You pay a fee if you pay off the mortgage during the fixed rate period

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 1 million ISK and the maximum amount is 60 million ISK.

Lending period and fees


Lending period

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 65,000 ISK but there is no fee for first time buyers
  • Registration fee
  • Mortgage issuance fee
  • Credit evaluation fee
  • Lien check fee
  • Loan overview fee

Prepayment


What is prepayment?

You can prepay your mortgage or pay more into 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 prepaid 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 1 million ISK into your fixed rate mortgage each year without paying a fee.

Umframgreiðslugjald reiknast eingöngu af fjárhæðum umfram 1 m.kr. og eru til viðbótar við reglulegar afborganir af láninu og aðeins á meðan lánið ber fasta vexti.

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