Buying a home is both a long-term investment and commitment. It is important to be well informed about issues regarding the best possibilities to finance the purchase, about what real estate brokers you can work with, and important details about the state of the property you are interested in.
Do you want to rent? Then you should read the Housing Guide
Foreign national buying a property in Iceland
Foreign nationals who are legally domiciled in Iceland may own residential property in Iceland.
If foreign national wishes to continue owning property in Iceland after leaving the country, they must apply for permission. Foreign nationals who are not legally domiciled in Iceland may apply for permission to buy residential property from the Ministry of justice
Buying a property
The process of buying a property can be divided into four main steps:
- Credit score evaluation
- Purchase offer
- Applying for a mortgage loan
- Buying process
Credit score evaluation
Before issuing a mortgage loan, banks and other financial lending institutions, require you to go through a credit score evaluation. These evaluations determine credit approval for the loan amount you qualify for. In this process, you are for example required to hand in past payslips, your most recent tax report, show that you have finances for the down payment in addition to other documents regarding any present or financial obligations. All elements that document your ability to commit to a mortgage loan.
In Iceland, individuals are legally permitted to handle the offering and buying process on their own. There are, however, many things to consider including legal matters regarding purchasing terms and large amounts of money. It is highly recommended to have a professional overseeing the process. Only certified real estate brokers and attorneys may act as intermediaries in real estate transactions. The fees for such services vary.
Before making a buying offer it is important to understand that it is a legally binding agreement. Before making an offer, be sure to learn about the state the property is in and the true property value. The seller is obligated to provide detailed information on the state of the property and ensure that the sale and presentation material provided corresponds to the actual state of the property. The buyer can better protect himself by inspecting the property thoroughly before making a purchase offer. It´s essentially the buyer’s responsibility to inspect the property thoroughly, it is difficult to claim compensation for hidden faults if they are found after legal contracts are completed and registered.
List of certified real estate agents on District Commissioner website.
Applying for a mortgage loan
Banks and other financial institutions give out mortgage loan to individuals who want to buy a property. They require that you have gone through a credit score evaluation and that you show an accepted and signed purchase offer. The amount of a mortgage loan is dependent on many things.
The Housing and Construction Authority (HMS) issues loans for the purchase of property and real estate.
Icelandic banks issue loans for the purchase of property and real estate. You can obtain information on loan conditions on the websites of the banks or by contacting a service representative at one of their branches.
Mortgage options compared (Icelandic only)
It´s also possible to apply for mortgage loans through some pension funds. More information on their websites.
If you are purchasing your first home in Iceland you have the option of accessing additional pension savings if you have them. You can request the funds to go towards your deposit and/or towards the payment of your mortgage.
Equity loans are a new solution for those with low-income or limited assets. Read about Equity loans here.
Finding a property
Real estate agencies advertise in all the major newspapers and there are many websites where you can search properties for sale. Advertisements usually contain essential information regarding the property itself and property value. You can always contact real estate agencies for further details regarding the state of the property.
Fréttablaðið (search possible in English, Polish and Icelandic)
MBL.is (search possible in English, Polish and Icelandic)