Learn about payment caps and lighter payment burden
Few have been unaffected by the changed economic landscape in Iceland, and high inflation and rising interest rates have disrupted the household budgets of many families. Those with non-indexed mortgages with variable interest rates have felt the greatest increase in payment burden. Similarly, those with fixed interest rates now face significantly higher repayments when their fixed-rate period expires.
To address this changed landscape, we at Arion Bank now offer a temporary payment cap on mortgages.
The payment cap works by replacing regular repayments with a fixed amount over a 12-month period, which reduces monthly payments. You can apply for the fixed payment cap amount to be based on 1%, 2%, 3%, or 4% lower interest rates than under standard terms.
If the loan repayment during the payment cap period is lower than the interest portion of repayments under the standard loan terms, the difference accumulates and is added to the principal of the loan after 12 months. This will result in a higher payment burden when the payment cap period ends.
With the introduction of the payment cap, more options are now available to reduce loan payment burdens.
We strongly recommend that our customers contact our staff to review their mortgages and explore whether a payment cap is a suitable option for them.
More detailed information about the mortgage payment cap can be found here.
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