HFF loans to homebuyers

Home Improvement Loans
Loans for improvements are available for most types of repairs and renovations. The maximum amount available is 80% of the total cost and the loan will be granted once the work has been completed and confirmed by members licensed through the Ministry of Industry and Commerce, such as architects and engineers. The minimum loan amount is ISK 400,000.
Recent changes include the possibilty if receiving the loan before the work has been completed. This however requires a bank guarantee covering the applied loan amount.

Credit Evaluation and Loan Application
Applicants must first submit an on-line credit evaluation. The evaluation determines the following: the applicant´s eligibility, the qualified loan amount, and the affordable price range of a new home. An instant reply via e-mail will confirm or reject the applicant´s eligibillity to borrow from HFF and the Savings Banks.
The loan application is to be submitted online once a bid for a home has been accepted. 

The Housing Financing Fund offers mortgage loans for home purchase, home construction and home improvement.  

HFF Mortgage Loans
Maximum loan amount available ISK 20.000.000
Maximum % of accepted bid price
or construction cost 		80% 
-  -
Interest rates A fixed rate of  5,00% without a prepayment fee or
a fixed rate of  4,50% with a prepayment fee*
Indexation Consumer price index
Maturity on loan 20, 30 or 40 years
Loan fee 1% of loan amount
Tax collected by the government (Stimpilgjald) 1,5% of loan amount
Payments per year 4 or 12 
Paper bill ISK 75
Electronic billing ISK 75
Conditions Only one home with a HFF loan per individual/family  

*A prepayment fee is collected at HFF in the event of partial prepayment or an early payoff only if the current interest rate at HFF is lower than the existing mortgage rate at the time of payment. 

The table below demonstrates how a prepayment fee is calculated on a 40 year, 4,60% fixed rate mortgage. The amount charged is based on the change in interest rates, i.e., the existing mortgage rate and the rate at the time of prepayment, as well as the number of years remaining on the mortgage. The example

 

Interest rate at
   time of payment  

Expected prepayment fee
 on HFF loans
 

 35 years left 

 25 years left  

  15 years left
4,60% 0,00% 0,00% 0,00%
4,50% 1,31% 1,03% 0,69%
4,40% 2,65% 2,08% 1,38%
4,30% 4,02% 3,14% 2,09%
4,20% 5,42% 4,23%  2,80%
4,10% 6,84% 5,32% 3,52%
4,00%

8,30%

 6,44% 4,24%
3,90% 9,78% 7,57% 4,97%
3,80% 11,30% 8,73% 5,71%
3,70% 12,85% 9,90% 6,46%