Equal payments - Equal installments

On loans with equal payments, the monthly loan payment is always the same. The payment burden is lower compared to loans with equal installments. The principal is paid off more slowly in the beginning, but asset formation increases with each installment.

On loans with equal installments, the principal installment is the same throughout the loan period. The principal is paid off faster compared to loans with equal payments, but the payment burden is higher to begin with but decreases with each installment. The payment burden decreases because interest payments decrease with decreasing principal.

Keep in mind that if a loan is indexed the payments will change in line with inflation.

Indexed loan

Indexed loans generally have a lower payment burden than non-indexed loans. Indexed loans are linked to the consumer price index and therefore rise in line with inflation. Inflation is calculated monthly, but indexation on loans is calculated daily.

Both the principal and payments on indexed loans rise in line with the consumer price index.

Non-indexed loan

Non-indexed loans involve a higher payment burden compared to indexed loans, but the principal amount is not linked to the consumer price index and therefore cannot increase.

Non-indexed loans are only available with variable interest.

Fixed interest – Variable interest

Indexed loans can have fixed interest or variable interest. Fixed interest remains unchanged throughout the loan period and includes more predictable installments and a more balanced payment burden compared to variable interest.

Non-indexed loans are only available with variable interest. During a long loan period, it can be guaranteed that interest rates will rise or fall, and thus the payment burden will also change.

The Board of Directors of Gildi decides on changes in interest rates. Interest rate decisions take into account market interest rates on similar loans, the fund's risk assessment, the Central Bank of Iceland's policy rate, deposit rates and expected inflation.