First buy

The Icelandic Act on first home buyer assistance was passed on the 1st of July, 2017. The Act authorises the tax free payment of a private pension towards buying a home or paying towards a mortgage. Anyone can utilise this option for a period of ten years. The Act is intended to help first home buyers.

Do you want to apply?

The RSK webpage provides all the necessary information

More information

  • The maximum allowance per person is ISK 500,000 over a 12-month period

  • The maximum allowance for a couple is ISK 1,000,000 over a 12-month period

  • You can use the private pension savings accumulated since the 30th of June 2014

  • The maximum allowance is 2% from the employer and 4% of your own premium

  • You can only use your private pension towards a property if you have not purchased or owned a property previously

  • The loan must be subject to interest allowance and must be used as a mortgage

  • You must be registered for at least 30% of the property

  • Those who have not been owners of residential property in the last 5 years can be considered first time buyers

Three options

You have three options to choose from. You can also mix and match.

1. Savings option

- Saving for a pay-out

2. Principal option

- Regular payments towards the principle loan amount

3. Mixed option

- Allocation of a premium towards a non-indexed loan and as payment towards the principal loan amount

- In this case, the premium for the first 12 months would be used in full to pay regular instalments and interest on a non-indexed mortgage

- This ratio decreases by 10% per year, whereas the ratio of payment towards the principal loan amount increases.

These options are available to anyone buying their first property and can be used for a ten-year period.

Anyone buying their first property can use their private pension savings, accumulated over 5 years, as a down payment and as a regular mortgage payment for the next 5 years. The total allowable period is 10 years.

Are you planning to buy a property after a year or more?

Most people who plan to use their private pension towards a new home prefer less fluctuations. The Home Plan option may be suitable if you intend to buy a property after a year or more.

Do you plan on buying a property in the near future?

A non-indexed pension account may be suitable if the purchase is likely to take place within a year.