Good to know

Anyone who has paid premiums to Gildi has the right to apply for a loan. The application is then assessed with regards to circumstances, and everyone is replied to as quickly as possible.

You can easily check your rights to taking a loan by clicking here. Please note that the action requires an electronic ID.

You have to pass both a payment ability evaluation and a credit rating. In order to get a loan, you have to provide a mortgage on a residential property in Iceland. The mortgage rate must never be higher than 70% of the appraised market value of the relevant property. The estimated market value is based on a recent purchase agreement or property assessment of the current year. Loans are divided into basic loans and additional loans, depending on the mortgage rate. A basic loan has a mortgage rate of up to 60%, and an additional loan has a mortgage rate of 60–70%. The mortgage may not exceed 100% of the property’s fire insurance appraisal plus the plot assessment. As an example, the maximum loan for a property with a value of ISK 30 million is ISK 21.0 million as long as the conditions for a fire insurance appraisal are met. An amount greater than ISK 75 million is not lent (including additional loans).

Gildi only provides mortgage loans and offers indexed loans with fixed interest rates.

Loan periods are between 5 and 40 years, at the choice of the borrower.

The maximum loan amount is ISK 75,000,000 for individuals/spouses/cohabiting individuals, and is also subject to available collateral. The minimum loan amount is ISK 1,000,000.

It generally takes 2–3 weeks to process a loan application. The borrower has to get the bonds officially registered themselves; how long it takes varies depending on the District Commissioner’s Office.

The borrowing fee is a fixed amount of ISK 55,000 for one bond and ISK 9,000 for each bond in excess of one. The document preparation fee is ISK 8,000 for each bond. The borrower pays the costs of the payment ability assessment, credit rating and other costs according to the tariff. Registration fees and bank collection costs must be paid by the borrower, ISK 2,700 for each document registered at the District Commissioner.

There is no prepayment fee on loans from Gildi, and they can be paid off at any time.

Loans are only provided if Gildi Pension Fund issues loans in a continuous order, beginning with the first mortgage. An exception can be made from the above claim for first priority and a continuous order of priority if the loan amount from other loan providers is less than 20% of the property’s value. The total amount of loans from Gildi and prior mortgagees shall not exceed the maximum loan amount.

Yes, it is possible to make additional payments towards a loan.

If the person in question has an account with Íslandsbanki, a one-time extra payment can be made through online banking on the Íslandsbanki app. Otherwise, a request can be sent to innheimtubref@islandsbanki.is to have a payment claim for the additional payment.

It is also possible to set up a subscription for regular extra payments, but the borrower must contact Íslandsbanki to enroll in that option.

If the intention is to pay off the loan fully, the borrower must contact Íslandsbanki.

Private pension savings can be used tax-free when buying real estate and as a deposit for a mortgage if certain conditions are met.

The Central Bank of Iceland has set rules on the maximum debt service-to-income ratio (DSTI) in proportion to disposable income. The maximum DSTI for housing loans is 35% of monthly disposable income. The maximum goes up to 40% for first-time buyers and up to 37.5% when one of the two buyers has previously owned a property. Debt service on non-indexed mortgage loans is calculated based on a minimum interest rate of 5.5% and a maximum loan term of 40 years, while debt service on indexed mortgages is calculated based on a minimum interest rate of 3% and a maximum loan term of 25 years.

The bonds themselves must be signed with two witnesses and submitted for official registration and collected once the registration has been completed. A bond will not be paid out until the registered document has been received by the fund.

If the instalments or interest are not paid on the due date, late payment interest will be paid in addition to collection costs according to the tariff of a commercial bank or legal firm at each time. If the contract is not fulfilled, Gildi may move up the entire debt to the due date without notice. As a last resort, the borrower’s home (mortgaged property) may be foreclosed.

Gildi’s Board of Directors decides on changes to the interest rates of mutual fund loans. In those decisions, interest rates on the market for similar loans and the fund’s risk assessment are mainly considered, but other factors are also taken into consideration. They vary depending on the type of loan, but they can include the Central Bank of Iceland’s policy rates, deposit rates as well as historical and expected inflation. More information can be found in Gildi’s loan rules.

The principal of an indexed loan is indexed based on the consumer price index. The principal must therefore be index-adjusted before regular instalments and interest are calculated. If we take an example of an ISK 10 million loan where the consumer price index increases by 1% between due dates, e.g., from 100 to 101 points, the principal also needs to be increased (index-adjusted) by 1%. It therefore increases from ISK 10 million to ISK 10.1 million before interest and instalment payments are calculated. The principal of a non-indexed loan does not change in relation to the consumer price index. As a result, non-indexed interest rates are higher than indexed. It can be said that an indexed loan generally involves a lower payment burden than a non-indexed one and slower asset formation. Gildi currently provides only indexed loans with fixed interest rates.

Fixed interest rates mean that the interest percentage of the loan remains the same throughout the loan period. Variable interest rates change according to the decision of the fund's Board at any time. When determining interest rates, the yield on registered indexed bonds with a government guarantee, market interest rates on similar loans, and the fund's risk assessment are taken into account. Therefore, it can be assumed that interest rates will rise or fall during the loan period, which affects the payment burden of such loans. Gildi currently provides only indexed loans with fixed interest rates.

A loan is considered a basic loan if the mortgage rate is less than 60% of the property’s value.

A loan is considered an additional loan if the mortgage rate is from 60–70% of the property’s value.

Basic loan interest rates are more favourable than the interest rates of additional loans. You can find information about interest rates here.

With equal instalments, the principal payment is the same for the duration of the loan term. The principal is paid off more quickly compared to loans with equal payments, but on the other hand, the payment load is higher to begin with and decreases with each instalment. The payment load decreases because interest payments decrease with decreasing principal. However, it should be noted that instalments and principal on indexed loans adjust in line with inflation. On loans with equal payments (annuity), the monthly loan payment is always the same. The payment load is lower to begin with, and the principal is paid off more slowly in the beginning compared to loans with equal instalments. However, it should be noted that instalments and principal on indexed loans adjust in line with inflation.

If the loans are not clearly visible in the tax return, you need to go to the sundurliðunarblað and mark the relevant ones, then transfer them to the tax return from there.

Loans from us have two loan numbers—one from Gildi and another from Íslandsbanki, which is our collection agent. The loan number from Íslandsbanki is visible on payment slips and in the Íslandsbanki online bank, while the loan number from Gildi is visible in our fund member portal.

• Loan arrangement fee for a basic loan – ISK 55,000
• Loan arrangement fee for an additional loan – ISK 9,000
• Document preparation fee per loan – ISK 8,000

You can find the loan purchase note in the Gildi fund member portal, which shows the borrowing cost as well as the amount allocated to pay off previous loans.