Turkish property has become an increasingly popular choice for buyers from around the world, thanks to its strong price growth, fuelled by demand for housing. We break down the mortgage lending process for potential investors.
Note: Exact figures can vary, depending on your own financial situation and your mortgage provider.
Can I choose between a UK or Turkish mortgage?
Yes. There are now a number of UK companies offering mortgages on property in Turkey, including to first time buyers. Turkish banks are also welcoming of foreign nationals seeking to buy property in the country. If you are planning to live in Turkey, this may well be the best option. However, if you will be continuing to live and work in the UK, you may find that it is easier to fund your Turkish property with a British mortgage or by re-mortgaging your existing UK home. By withdrawing equity from your UK home or taking a loan in the UK, you will be able to buy your Turkish property for cash and avoid applying for a Turkish mortgage.
How different is getting a mortgage in Turkey to another country?
Broadly speaking, the basic principle of acquiring a mortgage in Turkey is the same as in another country. However, buying a property in Turkey is more complex than more developed destinations such as Spain or France, which means that the whole process can take a lot longer. Make sure you have advisers on hand to guide you through the process, but also ensure that you begin your mortgage application as soon as possible to avoid it delaying the rest of your transaction.
How does the mortgage and buying process work?
Once you receive an approval for a mortgage, you will know the range of values you will be able to purchase a property at, confidently knowing that you can raise the necessary finance to support an offer. Once an offer has been accepted on a property and the sale agreed, a contract is normally drawn up, which includes the price, completion date and any other relevant information for the sale. An application of transfer is then made to the land registry, with deposits being paid, legal documents being drawn up, and local tax numbers being registered. Once the property is valued and the mortgage application reaches final sign off, the funds are released and the property completion date set. This is subject to transfer of the Title Deed (Tapu), as the title deeds need to be in the same names as the mortgage application.
What is military clearance?
Military clearance from the Turkish authorities is required for any foreigner to purchase property. Do not worry: this is standard practice for the country’s property market.
What loan to value ratio can I get?
The maximum loan to value (LTV) ratio available tends to be around 70 per cent for a loan in Euros and 75 per cent for a loan in GBP.
Are there any restrictions I should be aware of?
Turkish mortgages are generally only available in major towns, cities and resorts, such as Istanbul, Akbuk, Alanya, Antalya, Aydin, Bodrum, Datca, Didim, Fethiye, Izmir, Kalkan, Kusadasi, Mahmutlar and Mugla. Other locations may vary since the time of this article’s publication, but foreign buyers tend to buy only in such developed areas: if you are from overseas and planning to buy a property in Turkey, you are likely already looking at an eligible area.
What are the typical interest rates?
Interest rates are higher than in the UK, but also move more frequently, which means that this figure is likely out of date. However, you can expect to find rates vary within the margin of 4.5 per cent and 7.5 per cent.
What are the affordability requirements?
Turkish banks are quite strict when it comes to affordability, requiring that your existing liabilities, as well your Turkish mortgage payments, do not exceed around one-third of your monthly gross income.
Do I need proof of employment?
Yes, you will need several months’ worth of payslips and bank statements to proof your employment history. Those who are self-employed will need several years’ worth of audited accounts and tax returns.
What are the repayment terms?
Repayment terms can vary, but expect a maximum of 15 years, with the maximum age for repayment rising up to 80, depending on location, currency and property type.
How do I get started?
You can begin by browsing our listings of Turkish property for sale here.Google+