Non-Indexed Mortgage

The payments are initially higher but you can own your home sooner with a Non-Indexed Mortgage.

Next step

You can apply for a non-indexed mortgage within minutes (in Icelandic)

How does a Non-Indexed Mortgage work?

  • Two types of non-indexed mortgages, one with variable interest rates and the other with fixed interest rates for the first 3/5 years of the loan period.

  • It is possible to fix the interest rate on non-indexed mortgages for 3 or 5 years with a so-called term change.

  • You can pay your mortgage off sooner because the full cost of the mortgage is paid every month.

  • Payments are initially higher than those on indexed mortgages.

  • 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

  • You can choose between equal installments of principal and equal payments (annuity).

  • You can make installments on the loan or repay the loan in the online bank.

Compare mortgages

You can choose between two types of non-indexed mortgages. The interest on our traditional non-indexed mortgage is calculated each time, according to the bank's interest rate table whereas our fixed rate mortgage offers a fixed interest rate for the first 3-5 years.

Variable rate

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

Fixed rate for a 3-5 year period. Interest rate becomes variable once fixed rate period is complete

Pay off the mortgage without paying any fees

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

Term change - Fixing interest rates

It is possible to fix the interest rate on non-indexed mortgages for 3 or 5 years with a so-called change in terms, but then the payment burden remains fairly stable. After that time, the loan bears variable interest according to Art. interest rate table but you can always request to fix the interest rate again with a change in terms. The cost of changing the terms is according to the bank's price list at any given time.

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Loan amount

We provide a basic loan of up to 70% of the real estate appraisal. Borrowers are also offered to take out additional loans up to 80% of the purchase price of residential housing. The minimum amount is ISK 1,000,000. but a maximum of ISK 60,000,000. Special rules apply for loans in excess of 60

Interest rate roof

Our interest rate roof option offers our non-indexed customers a safety net when interest rates rise.

Why should I apply for an interest rate roof?

  • You can worry less about payment fluctuations.
  • You can still take advantage of the terms offered by a non-indexed mortgage despite higher interest rates.
  • You can pay of your mortgage sooner if interest rates remain consistent with inflation rates.
  • You can choose the roof beyond the 7.5% annual interest rate and adjust your payments accordingly.

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 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?

You can apply for a mortgage if you fulfil the following criteria:

  • Individuals intending to buy or refinance a home for own use can apply
  • Íslandsbanki will have first lien position or equal lien on the property
  • Mortgages are provided against fully furnished housing. Housing must have reached construction stage 7
  • The financial status of the applicant and property price are considered each time
  • Each applicant must successfully complete a credit evaluation