The applicant must have paid premiums into the Gildi Pension Fund, either the mutual insurance division or private supplementary divisions.
Borrowers can choose between indexed and non-indexed loans or a combination thereof. Indexed loans are available both with fixed interest and with variable interest. Non-indexed loans are available with variable interest. It is possible to choose between loans with annuity payments or regular installments.
Loans are divided into basic loans and additional loans according to the mortgage ratio. Basic loans assume a mortgage of up to 60% of the value of the property in question. The additional loan is the proportion of the loan that is between 60–70% of the value of the property.
The fixed interest rate is based on the date of issue of the bond and is currently 4.10% The loans are indexed based on the consumer price index. The fixed interest rate of indexed loans does not change during the loan period.
The variable interest rate at present is 4.00% Interest rate terms can change over the course of the loan period according to the decisions of the Board of Directors of the Fund. Account is mainly taken of the required rate of return of listed indexed bonds with state guarantees, market interest rate terms for comparable loans and the Fund’s risk assessment when determining interest rates. The loans are indexed based on the consumer price index.
The variable interest rate at present is 10.35% Account is mainly taken of the policy rates of the Central Bank of Iceland, interest rates on deposits, the required rate of return of listed indexed bonds with state guarantees, historical and expected inflation, market interest rate terms for comparable loans, and the Fund’s risk assessment when determining interest rates.
The fixed interest rate is based on the date of issue of the bond and is currently 4.85% The loans are indexed based on the consumer price index. The fixed interest rate of indexed loans does not change during the loan period.
The variable interest rate at present is 4.75% Interest rate terms can change over the course of the loan period according to the decisions of the Board of Directors of the Fund. Account is mainly taken of the required rate of return of listed indexed bonds with state guarantees, market interest rate terms for comparable loans, and the Fund’s risk assessment when determining interest rates. The loans are indexed based on the consumer price index.
The variable interest rate at present is 11.10%. Account is mainly taken of the policy rates of the Central Bank of Iceland, interest rates on deposits, the required rate of return of listed indexed bonds with state guarantees, historical and expected inflation, market interest rate terms for comparable loans, and the Fund’s risk assessment when determining interest rates.
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 Gildi and prior mortgagees shall not exceed the maximum amount cf. Article 3.2.
| ADDITIONAL LOAN | |
|---|---|
| (65-75% mortgage ratio) | |
| 4.85% | |
| 4.75% | |
| 11.10% |
The minimum loan granted by the Fund is ISK 1,000,000
The maximum amount for a member loan to an individual, married couple, or cohabiting partner is ISK 75,000,000 in total (including additional loan), and also takes account of mortgage limits, cf. Article 5.3, and an assessment of the borrower’s payment ability and creditworthiness, as provided for in Article 6.
Despite the above, loans above the maximum amount with liens in the same property are permitted, in the case of a refinancing of a mortgage/loans that have previously been made by the pension fund and if the new loans (basic loan and additional loan), with the exception of cost, are only allocated for repayment in full of older loans with the fund with a lien in the same property.
Loan periods are between 5 and 40 years, at the choice of the borrower.
Installments are on a monthly basis.
The loan may be paid in full or in part without the imposition of a prepayment fee.
Loans are only provided in exchange for a lien on the residential housing of the borrower. Loans are not provided for the purchase of property for commercial purposes, e.g. renting.
If the residential housing to be mortgaged to secure the loan is also partly or wholly owned by the spouse of the Fund member, a person cohabiting with the borrower or a person with whom the borrower is in a registered partnership, such person must be the co-borrower (co-debtor) of the requested loan.
The mortgage ratio may not exceed 70% of the official real estate assessment of the property or the purchase price as per purchase agreement or approved purchase offer. The purchase agreement may not be older than 6 months, with respect to the date of the application. Mortgages, however, may never exceed 100% of the property’s fire insurance assessment and site valuation.
Despite the above, additional loans can be made with a higher mortgage ratio than 70%, in the case of a refinancing of a mortgage/loans that have previously been made by the pension fund and if the new loans (basic loan and additional loan,) with the exception of cost, are only allocated for repayment in full of older loans with the fund, with a lien in the same property.
Buildings under construction are considered eligible as security for loans, provided that a certificate of weather tightness, together with the valuation of a real estate agent selected in consultation with the Fund, is provided.
Loans may be granted in exchange for a lien in property subject to the provisions of legislation on social assistance housing, provided that at least 15 years have elapsed from the issue of the conveyance of title to the owner or any pledges have been lifted.
Loans are not granted if the property assessment or valuation is less than ISK 7,000,000
The loan provision can be reduced or denied if it is the opinion of the Fund that there is doubt regarding the possibility of property resale or if there is reason to question its value, e.g. due to its condition.
Cf. Article 20 of Act No. 118/2016 on Consumer Loans, the Pension Fund is under obligation to perform a payment ability assessment on the applicant. The Pension Fund, moreover, according to the provisions of the same Article of the same Act, is under obligation to assess the creditworthiness of the applicant. The Fund reserves the right to investigate the borrower’s position on Creditinfo’s defaulters’ list. The Pension Fund may deny an application for a loan or limit the loan amount in the event that a creditworthiness and/or payment ability assessment reveals that the applicant does not have the financial strength to repay the loan or an acceptable creditworthiness.
Borrowing costs are in accordance with the price list of the Fund. The borrower is responsible for paying registration fees, as well as any bank collection costs.
When a loan has been accepted, a bond is issued that needs to be registered. Bonds are bought (paid out) following the registration. The Fund reserves the right to cancel the purchase of and deregister mortgage bonds that are not submitted to the fund within three months from the date of issue, or if there have been substantial changes in the assumptions of borrowing since the loan was approved.
Gildi Pension Fund reserves the right to reject loan requests for any reason.
These rules shall enter into effect as of October 5th, 2024.
The Fund reserves the right to investigate the borrower’s position on Creditinfo’s defaulters’ list.
Information on property valuations and fire compensation assessments may be obtained from the website of Þjóðskrá (at Registers Iceland).