Earlier this year, new legislation made the option to use Private Pension savings to repay mortgages permanent. Previously, this option had been available on a temporary basis and extended several times before expiring on 31 December 2025.
Applications under the new arrangement opened this week on Ísland.is. It is possible to apply retroactively for the whole of 2026, but applications must be submitted before 1 December to take advantage of this.
Under the new legislation, individuals can use up to ISK 500,000 per year from their Private Pension savings to repay a mortgage. The arrangement can be used for up to 12 months per year over a maximum of 10 years, or 120 months in total. Payments made in previous years also count towards this limit. During the application process, applicants can see how much of their allowance remains unused.