Additional loan payments and settlements of loans
Additional loan payments and settlements of loans
You can choose to make additional payments on a housing loan in addition to the regular payments and thus reducing the principal amount or paying the loan in full. This does however not apply to equity loans and the following information does not apply to them.
HMS will send a claim for the additional payment to your internet bank but it is also possible to make a e fixed additional payment plan. For some loans you will need to pay a prepayment fee.
Example
You want to pay ISK 1 million towards your housing loan in one payment.
You want to pay ISK 100.000 towards your housing loan monthly in addition to the regular payment.
You want to pay your housing loan in full in one payment.
You want to use your additional pension savings towards your housing loan.
Additional payment of a loan
You log on to the HMS loan website and choose additional payment. There you find the correct loan and specify the amount you wish to pay.
You can also contact HMS by phone 440 6400 or by email to hms@hms.is.
You wish to make an additional payment towards the loan and decide when the payment should take place. You can request that the payment takes place that same day or on a specific day. You can also make a payment plan for additional payments for the next 6 to 12 months.
HMS sends a claim for the additional payment to your internet bank.
You pay the claim and your payment summary is on My pages
island.is under Finance.
Settlement of loans
You log on to the HMS loan website and choose to pay up a loan. There you find the loan and specify the amount you will be paying.
You can also contact HMS by phone 440 6400 or by email to hms@hms.is.
You request to pay up a loan.
HMS sends a claim to your internet bank. The claim must be paid on the same day.
You pay the claim and your payment summary is on My pages islands.is under Finance.
HMS sends the loan for deregistration at the District Commissioner’s office (Sýslumaður).
Within 90 days from the deregistration you will receive the original loan documents by mail.
Payment
If you decide not to pay the additional payment or settle the loan, the claim in your internet bank will be automatically cancelled after 5 days. The borrower will not be considered to be in arrears even though these claims are not paid.
If a payment of more than ISK 10 million is to be made on the same day, it must be paid by 16:00. Lower payments can be paid until 20:30.
A claim is only sent to the payer and the co-payer of the loan or their respective agents.
Regular payments and additional payments
It is important to remember that when you make an additional payment towards a loan, it is in addition to the regular payments. Additional payments are usually intended to reduce the principal loan amount or what is left of the loan (face value + interest) plus accrued indexation if the loan is inflation-indexed.
When a regular payment and an additional payment are paid on the same day, the regular payment has to be paid first and then the additional payment immediately afterwards. This way the additional payment works best to lower the principal amount and does not go towards accrued interest and indexation or the regular payment itself.
Example
You make the regular payment on the first day of the month but the additional payment not until the sixth day of the same month. In this case part of the additional payment will go towards the interest that have been accumulated in the first 6 days of the month.
If you make the additional payment before the regular payment, it will go towards reducing the regular payment and it will be decreased accordingly.
If you want to make sure that the additional payment lowers the principal as much as possible, you make the regular payment first, for example on the first day of the month, and the additional payment immediately on the same day or the next day.
Additional pension savings
If you wish to use your additional pension savings as payments towards the principal loan amount, you can find information on that and an application form here Leiðrétting.is.
Prepayment fee
Some loans have prepayment fees (loans from 2003-2014) In those cases the prepayment fee will be part of the total payment. Information on the prepayment fee can be seen in the loan statement on island.is under Finance or on the HMS loan website .
Our consultants can also give information on the prepayment fee amount when an additional payment or settlement is requested.
Example
You wish to pay ISK 1 million towards the loan. There is a 1% prepayment fee (ISK 10.000) so ISK 999.000 will be paid towards the actual principal amount.
Equity loans
Equity loans are different from other loans as there are no monthly payments or interest, instead you pay back the loan after 10-25 years or when you sell the apartment. Here you will find information on the terms of equity loans.
Service provider
Housing & Construction Authority