Sale of a over mortgaged property

If your housing loan is higher than the market value of the property and you default on the loan, you can sell the property and the remainder of the loan will become an unsecured claim with HMS.

Application

Conditions

• You do not have the ability to pay the loan.

• Other solutions to payment problems at HMS are not sufficient.

• Payment difficulties are due to unexpected illness, accidents, reduced employment, unemployment or other unforeseen events.

• You have owned the property for at least 24 months.

• You have paid at least one third of the calculated due dates since taking out the loan.

• You are not the owner of more than 500.000 ISK in other assets in excess of debts (student loans are not included).

• You live in the property and have legal domicile there. You can get an exemption for circumstances beyond your control, for example illness, if the property is uninhabitable, moving for work or studies.

• Loan defaults on the application date are less than 12 months old. You can get an exemption if the reason for the default is not your fault, for example illness or payment protection.

• The selling price is in accordance with the market price.

• The entire sale price is allocated to the payment of the loan (1.5% of the sale price, plus value added tax, can be allocated to the real estate agent and will then be added to the remaining debt)

• The property is delivered to HMS within 3 months from the approval of the application.

• The purchase price is paid in full upon delivery of the property.
  

  If the application is accepted, the property goes through the sale process and the loan is reduced according to the sale price. The remaining amount (difference between the loan and the sale price) will become a residual claim that will be sent to your internet bank.

Residual claim (remaining debt)

For every one ISK you pay towards the claim, one ISK is deducted. Example: You pay 100.000 ISK and HMS reduces the debt by 100.000 ISK in return.

After 3 years, you can apply for cancellation of the residual claim.

In the claim’s duration (also called unsecured claim) you will not be able to get a loan from HMS. Some other credit institutions grant loans despite an unsecured claim.