Postpone payment of housing loans
Customers with housing loans and real estate loans issued by Landsbankinn, can apply to postpone payments or temporary decrease of payments for up to six months if necessary. The solution provides for the deferral of housing loan payments for six months but the customer can cancel deferral at any time. Interest accrues to the principal at the end of the period. The term of the loan is extended to reflect the postponement period. The solution is primarily designed for individuals facing significant loss of income due to unemployment, reduced working hours or illness. The Bank levies no fee on the amendment but changes to the loan require public registration. District commissioners charge ISK 2500 for public registration, payable by the borrower.
Because of Covid-19, the addendum to the agreement to postpone payment can be signed using electronic ID. The addendum and its terms enter into force immediately upon electronic signature. Note that the addendum must be publicly registered by 16.02.2021.
- How does payment postponement work?
Answer: Payment postponement means that no payments are made on the loan for up to 6 months, neither instalments nor interest. Instalments are postponed but the loan continues to bear contractual interest, which accrues to the principal at the end of the period. The term of the loan is extended to reflect the postponement period and an addendum, requiring public registration, is added. Under usual circumstances, the addendum requires public registration before it can enter into force, but this requirement is waived with an agreement with the customer due to Covid-19.
- What is the procedure for postponing payment?
Answer: Customers can conclude an agreement with the Bank, providing for the postponement of housing loan payments for up to 6 months. Customers are required to sign the agreement using electronic ID. Under the agreement, an addendum is added to the loan, postponing payments with immediate effect. The agreement also provides that the customer must complete further formalities connected to the addendum within 6 months. These formalities are: Hand-written signature of the customer, witnessing, approval of lien holders and public registration. In concluding the agreement, the customer obliges him-/herself to contact the Bank within 6 months to finalise these formalities.
- Do I need to have electronic ID in order to sign the addendum?
Answer: Yes, it cannot be signed otherwise.
- How do I activate electronic ID?
Answer: Electronic ID is personal identification used in electronic transactions. To activate electronic ID, please make an appointment with your local branch.
- Who can take advantage of the solution?
Answer: The solution is primarily designed for individuals facing significant loss of income due to unemployment, reduced working hours or illness. The Bank may request confirmation of income loss from the customer.
- What does the agreement entail for me and why must it be signed using electronic ID?
Answer: The agreement provides for the customer’s obligation to visit the Bank within 6 months to finalise the addendum to the loan. The customer is also informed that the provisions of the addendum enter into effect immediately, despite not being publicly registered.
- Why can’t the addendum to the loan be signed using electronic ID?
Answer: At this time, it is not possible to sign loan documents or the addendum using electronic ID nor can documents be publicly registered electronically.
- Will the loan go into arrears while the addendum is in effect?
Answer: No, the loan will not go into arrears nor will any collection costs accrue.
- What are the pros and cons of postponing payments for me?
Answer: The pros are that the borrower gets a payment holiday for the duration of the postponement. The cons are that interest accrues on the loan and is added to the principal at the end of the period. The term of the loan is extended to reflect the postponement period, resulting in debt service remaining similar to what it was prior to postponement.
- For how long can I defer payments?
Answer: This postponement applies for 6 months. Postponement can be cancelled at any time during the period, provided that the addendum and linked formalities, such as public registration, have been finalised.
- How do I apply?
Answer: To apply for this solution, complete this form at the bottom of the page and submit the application. We will contact you within a matter of days.
- Is there a fee for postponing payments?
Answer: The addendum to the loan (providing for postponement) must be publicly registered, for which district commissioners charge ISK 2500. This fee is paid by the borrower.
- Does the addendum to the loan require public registration?
Answer: Yes, but not immediately. The hope is that it will become possible to do so electronically. The Bank can take care of sending the addendum to the district commissioner and receive it again for registration and processing. The fee for registration is ISK 2,500 per loan.
- Is the approval of other mortgage holders required?
Answer: No, addendums providing for Covid-19 solutions are exempt from approval by other mortgage holders.
- My loans are already in arrears. Can I take advantage of the solution nonetheless?
Answer: Payment postponement is primarily intended for customers who are not in arrears yet anticipate having difficulty making payment in coming months.
Customers already in arrears can request that the Bank review their case with an eye to finding possible solutions. Such requests can be mailed to email@example.com and will be handled by each customer’s local branch.
- If my income increases again within 6 months, can I contact the Bank and finalise the addendum?
Answer: Yes, you can do that at any time.
- Is it possible to postpone payment of loans secured by collateral?
Answer: No, that is not possible.
Disbursement of private pension savings
One of the solutions presented by the government is temporary authorisation to withdraw private pension savings (also called supplementary pension savings).
- The maximum amount available for withdrawal is ISK 12 million.
- The maximum monthly withdrawal is ISK 800,000.
- No restrictions apply to the disposition of the funds.
- Income tax is levied on the amount. The pension fund/bank handles withholding tax.
This solution may be suited to individuals who lose their income, especially when no other savings exist.
The authority to withdraw private pension savings is important in the current circumstances but it must be borne in mind that this reduces the pension available upon retirement. Income usually decreases considerably when individuals go into retirement, making it important to continue to build savings.
How do I apply?
Apply with electronic ID:
Electronic ID can be used to apply for temporary disbursement of private pension savings on the fund member website.
As of May 2020, disbursement will take place on the 20th of every month. Applications received before the 15th of each month will be paid out on the 20th.
The fund member website
Apply without electronic ID:
Fund members who do not have electronic ID can email RadgjofVL@landsbankinn.is and request an application form. A completed and signed form is scanned and emailed back to RadgjofVL@landsbankinn.is.
As of May 2020, disbursement will be made on the 20th of each month and the application must be submitted no later than the 15th of each month.
- What should I know about withdrawing private pension savings?
Answer: Before deciding to withdraw private pension savings, it is worth noting that this will reduce the amount available upon retirement. It is also likely that the withdrawn amount will fall into a higher tax bracket if the individual has other income at the same time. Withdrawal of pension savings may affect the income-linked instalment on student loans from LÍN.
Further information on Umræðan
- How can I use private pension savings for living expenses?
Answer: Anyone who owns private pension savings can withdraw up to ISK 12 million over a 15-month period. The reference date for the solution is 1 April 2020.
- When can I apply to withdraw my savings?
Answer: Applications will be open from April 2020 to 1 January 2021.
- When can I get private pension savings paid out?
Answer: Private pension savings will be disbursed monthly over a 15-month period as of application. The beneficiary determines the amount to be withdrawn per month (max. ISK 800,000) and the number of disbursement dates (up to 15 months).
- When will I get the initial payment?
Answer: A special disbursement will be paid out on the 20th of each month and the application must be submitted no later than the 15th of each month.
- How much can I get paid out per month?
Answer: Disbursement can amount to a maximum of ISK 800,000 per month and income tax is levied on the payments, just as with other income. The pension fund/bank handles withholding tax.
- What is the deadline for application?
Answer: The deadline for application is 1 January 2021.
- Do I pay tax on the withdrawn funds?
Answer: Yes, income tax will be levied on the amount. The pension fund/bank handles withholding tax.
- Can everybody apply?
Answer: Yes, Yes, anybody who owned private pension savings as at 1 April 2020 is eligible to apply.
- Where can I apply for withdrawal of supplementary pension savings?
Answer: Application for withdrawal of private pension savings is made through the fund member website using electronic ID. As of May 2020, disbursement will take place on the 20th of every month. Applications received before the 15th of each month will be paid out on the 20th. Individuals who do not have electronic ID can email RadgjofVL@landsbankinn.is to request an application form. A completed and signed form is scanned and emailed back to RadgjofVL@landsbankinn.is.
- Where can I see the balance of my private pension savings?
Answer: Information about private pension savings is available on the fund member website and online banking.
- How can I use the funds I withdraw?
Answer: No restrictions apply to the disposition of the funds.
- Does it matter whether previous authorisations to withdraw private pension savings have been utilised or that it has been used as down payment on a real estate loan or to purchase housing?
Answer: No, it is not material to withdrawal of private pension savings now that is has previously been used to make payment on a real estate loan or to purchase housing. The only thing that matters is your balance as at 1 April 2020.
- Can I withdraw premiums paid toward supplementary pension savings after 1 April?
Answer: No, that is not possible. These later payments will continue to be available to pay towards housing loans and first-time housing purchase.
- Does withdrawal of private pension savings affect benefit payments, such as children’s benefits or interest subsidies?
Answer: No, withdrawal of private pension savings based on this solution will not affect children’s benefits or interest subsidies. Withdrawal will not affect other social benefits, in accordance with the Act on Social Security and Social Assistance, nor will it affect payment of housing subsidies, unemployment benefits or payments to parents of children with long-term illnesses or severe handicap.
It is important to ensure that your housing loan aligns with your current situation and goals at any given time. As interest rates have decreased, it might pay to look at available options. The housing loan calculator is a good way to compare loan options. If you require advice about housing loans or refinancing of housing loans, you can request a phone consultation and we will be in touch.
- How do I apply for a housing loan or refinancing?
Answer: You can complete a credit assessment and apply for housing loans on landsbankinn.is. The website also has information about available options both in refinancing and new loans. The housing loan calculator is a good way to compare loan options. If you require advice about housing loans or refinancing of housing loans, you can request a phone consultation and we will be in touch.
- How can I get a credit assessment?
Answer: You can complete a credit assessment on the Bank's website for both housing loans and vehicle financing.
You can adjust your credit limits in the app and online banking. You receive a credit framework which you can divide between Aukalán loans, overdraft authorisations and card limits as you see fit. The credit framework is calculated regularly automatically and is based on your finances and business history. For any credit facility or amendment in excess of the credit framework, call +354 410 4000 or request a financial consultation.
- How do I apply for solutions to payment difficulties?
Answer: The application form for payment solutions is on the site Solutions for you. If these solutions do not meet your needs, please request a phone consultation because of payment difficulties.
- How do I change an overdraft authorisation?
Answer: You can apply for a short-term loan and adjust your limits in the app and online banking. You will receive a credit framework which you can divide between Aukalán loans, overdraft authorisations and card limits as you see fit. The credit framework is calculated regularly automatically and is based on your finances and business history. For any credit facility or amendment in excess of the credit framework, contact the Customer Service Centre (tel. +354 410 4000) or request a financial consultation.
- How do I apply for an Aukalán loan?
Answer: An Aukalán loan is a short-term loan you can apply for through the app. You can see at once the amount of credit available to you and the terms that apply. The loan is payable to an account or credit card. If you do not have the app already, download it to apply for an Aukalán quickly and easily, anytime and anywhere.
- How do I apply for a vehicle loan?
Answer: If the amount of a loan exceeds ISK 2,200,000 for individuals or ISK 4,400,000 for married couples or common-law spouses, a credit assessment must first be completed. Completing a credit assessment on our website is an easy matter, as is requesting advice from our experts in vehicle financing. We will contact you soon after you send in a request.