Can I get a mortgage in Turkey?
If you require finance to buy a property in Turkey, there are a few avenues available to foreign buyers. While there is an option to obtain finance through a Turkish bank, interest rates are high and we warn against going down this route. Instead, you can opt to finance back home, or arrange finance with your developer.
Here are the options available to anyone looking for finance for a property in Turkey.
1. Obtain finance through your property developer
Larger Turkish developers offer good finance terms over periods of up to five years. You'll generally need to put down between 30 and 35% as a deposit. The subsequent finance terms are generally favourable, with much better interest rates than those found at Turkish banks.These are offered at much lower interest rates than Turkish banks.
2. Obtain finance in your home country
Interest rates in your home country will most likely be vastly lower than in Turkey. Talk to your bank about arranging a mortgage, or releasing equity from a property you already own.
3. Obtain a mortgage from a Turkish bank
Foreign buyers can arrange finance through a few Turkish banks, most of which will have English speaking financial advisors to help buyers navigate the process. Banks will offer as much as 70% of the property value, with some offering finance in Dollars, Euros or Pounds. Repayments take place over a maximum of 20 years, and cannot be more than a third of your income.
Some Turkish banks can offer off-plan finance for buyers with homes still under construction. This option will hinge on obtaining a guarantee from the construction company.
What are the interest rates on a Turkish mortgage?
Turkey's high interest rates are the chief reason foreign buyers refrain from seeking out finance from a Turkish bank.
If you're a property investor looking to earn rental income from your new real estate purchase, the prohibitive cost of borrowing will eat into any rental income you receive. We recommend amending your budget so you are able to invest without the need for a mortgage.
Conditions of a mortgage in Turkey
If you decide to opt for a Turkish mortgage, bear in mind that a bank will not allow a mortgage if your property does not have an iskan (habitation licence), or has debt standing against it. An iskan demonstrates the property meets the government regulations, making it liveable. Quite a few older resale properties do not have this licence, which is one of the reasons foreign buyers opt to buy new build properties in Turkey.
When you apply for a loan, your bank will go to the local land registrar to find out these details.
How do you get a mortgage in Turkey?
These documents need to be translated into Turkish and certified:
- Signed application form
- Notarised passport copies
- Bank statements no older than three months proving income
- If employed, your payslips. If self-employed, records showing two years of financial history
- Overview of private assets and debts
- Turkish tax number
- Credit rating certificate from your home country
- Title deeds copy of the property you are buying