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Mortgage in Turkey can be a confusing topic for those who are new to it- but don’t worry! In this blog post we’ll go over everything you need to know about mortgage in Turkey so you can make the right decisions when looking into your options.
Turkish Mortgage, like mortgage everywhere else, has its own set of rules and regulations that every prospective borrower needs to understand before signing on the dotted line.
About Mortgage in Turkey
Turkey is a developing country where the real estate market is booming and there is opportunity for growth. The country provides plenty of options across different budgets.
The country year-round sunny Mediterranean climate, particularly along the southern and western coasts, contributes to the country’s popularity as a tourist destination. Purchasing property in Turkey is also attractive due to the potential for capital growth.
Turkey offers a mortgage system that will suit any type of individualism with extensive flexibility between different types of mortgages such as variable interest rates, adjustable rates, residential mortgages, low interest rate mortgages, international mortgages and long term mortgages.
- Mortgages in Turkey are available for both foreigners and citizens who wishes to buy or construct a house – you’ll need to apply for one of these mortgages from your bank or mortgage company first.
- Mortgage rates are set by the government to protect consumers from high interest. The rate is calculated annually and announced at the beginning of each year.
- There’s no maximum or minimum amount you can borrow for a home – as long as your bank approves it!
- Mortgages in Turkey tend to be different than mortgages elsewhere, so it’s important to know the ins and outs before you start applying for one.
Benefit of Mortgages in Turkey
You can benefit from Mortgages in Turkey by taking advantage of the following:
- It is possible to arrange a payment plan with an interest period of up to 120 months at competitive profit and allocation fees.
- 75% of the expertise value of the soon-to-be-owned house may be covered by financing assistance.
- In the case of residential and commercial real estate, this work is handled by independent firms that are licensed by the Capital Markets Board (CMB).
- Foreign exchange loan, foreign currency loan, and residence registration abroad could extend the duration of the loan. Borrowers who live in Turkey have access to loans in long term loans.
These mortgages come with various obligations and servicer fees.
Risks of Mortgage in Turkey
There are also risks involved when investing in Turkey when considering the high rates of foreclosures and repossessions due to Turkey’s past economic downturns.
Mortgage in Turkey is a good option for those who are looking to buy property, but it comes with some risks. Mortgage rates can be set by the government at any time- so if their interest rate changes up or down you could see your own mortgage’s rates change as well!
You also need to keep an eye on inflation and economic stability.
The fluctuation of the Turkish Lira can pose a risk if you have bought a real estate in Turkey with Foreign currency Mortgage and rent it, so you will collect the rent in Lira but pay higher in USD or Euro.
Steps for getting a mortgage in Turkey as a foreigner
- The applicant should apply for mortgage funding at a Turkish bank, and alternatively, submit a letter of proxy for a Turkish lawyer/individual who has been empowered to make loan transactions and to sign loan documents.
- An application should be submitted using documents issued in the applicant’s native language.
- The documents are issued in foreign countries, and they must be certified by the country’s authorized bodies and bear a “apostille” to verify their proper issuance.
- For documents bearing an apostille, a sworn translator in Turkey verifies the translation and notarizes the certification.
- Documents issued in the official language of a country that is not a party to the Convention for Apostilles should be certified by the Ministry of Foreign Affairs and then by the Turkish Consulate.
- Sworn translators in Turkey should translate the documents and certify the translations.
- To acquire real estate, a foreigner must comply with the rules that pertain to the foreign land acquisition as established by the government.
- Foreign nationals are not allowed to buy or sell properties bearing the ‘sales unavailable to foreigners’ notice.
Documents you need to apply for a mortgage loan in Turkey
You will need the following documents when applying for a Turkish mortgage:
- For the bank to judge your financial situation, you have to provide last three months’ pay slips and your most recent P60 – (for UK citizens only). You will also need to show proof of any bonus, commission, or allowances you want to be counted as income. Credit check report is also necessary.
- In order to confirm your self-employment status, the bank require an audited or certified financial statement from your accountant for the previous three years, or a statement of earnings.
- You will also have to provide your current loan and credit card payments, as well as all of your other contractual payments.
- A valid full passport or certificate of residency is required as proof of identity. All documents are acceptable to verify your current address.
- Application form.
- The deed to be acquired for the property.
- Tax identification number (Issued in Turkey).
Additional documents and guarantees can be requested such as
- First legal mortgage over the property to be purchased.
- Home Insurance.
- Mandatory Earthquake Insurance.
- Credit Life Insurance.
Additional documents and guarantees, such as those listed below, can be requested.
- The first legal mortgage is placed on the property to be purchased.
- Insurance for your home.
- Earthquake insurance is required.
- Credit Life Insurance is a type of life insurance.
Insurance premiums are paid by the customer and are subject to change based on the loan’s terms and conditions. Your bank can provide you with a personalized illustration for any mortgage loan-related insurances.
Turkey mortgage rates
Turkey’s mortgage interest rate ranges anywhere from 15 to 18 percent depending on what type of loan you’re using (long term, etc) which can be expensive if capital isn’t sourced correctly.
You can create a mortgage payment plan that suits you with changing mortgage rates depending on the schedule of payment.
There are different banks in Turkey that provides variety of mortgage rates and payments method as you can apply in Ziraat Bank, Yapi Kredi Bank , Iş Bank , Şeker Bank, Garanti bank, Ak bank, and the Bank of QNB.
You can also apply for a mortgage through a Islamic bank that provides the best Turkey mortgage rates according to the Islamic law such as Kuveyt Turk bank and Albaraka Turk.
