An example from a model constructed in 2014 by The Homes Association, showing the projected development and cost of a typical inflation index-linked mortgage over time, compared with other types of loans and specifically with nominal rate loans which are ordinary for most other countries. The example is calculated given prevailing inflation of 4,83% in april 2013, but as shown the historical average is as high as 5,84%. Additionally this particular example shows the loan being refinanced every 8 years, leading to an ever increasing loan capital which can never be repaid.
An example from a model constructed in 2014 by The Homes Association, showing the projected development and cost of a typical inflation index-linked mortgage over time, compared with other types of loans and specifically with nominal rate loans which are ordinary for most other countries. The example is calculated given prevailing inflation of 4,83% in april 2013, but as shown the historical average is as high as 5,84%. Additionally this particular example shows the loan being refinanced every 8 years, leading to an ever increasing loan capital which can never be repaid.
An example from a model constructed in 2014 by The Homes Association, showing the projected development and cost of a typical inflation index-linked mortgage over time, compared with other types of loans and specifically with nominal rate loans which are ordinary for most other countries. The example is calculated given prevailing inflation of 4,83% in april 2013, but as shown the historical average is as high as 5,84%. Additionally this particular example shows the loan being refinanced every 8 years, leading to an ever increasing loan capital which can never be repaid.
THE INCREDIBLE LOAN MACHINE A Model of Icelandic Consumer Loan Repayment Structures
LOAN CRITERIA Loan to value Loan principal Stamp duty Borrowing fee Paperwork cost Cash disbursment Borrowing date First payment Loan term Instalments Invoice fee
* Proportional = payments proportional to remaining principal, plus interest
** Nominal = nominal amounts, excluding indexation cost components (significant part of total cost) -- Note: before 2013, lenders have in most cases omitted indexation when providing loan price information
