Until a few years ago it was fairly difficult to get a Turkish mortgage, but times change and now if you want to invest in a Turkish property it’s easy to apply. If you are looking for a Turkish mortgage it is in your own interest to use a reputable agent who will already have a good working relationship with lenders and can negotiate the best rates for you. There could be language difficulties and other problems so try not to do it yourself and ask a specialist to arrange it on your behalf. One important fact is you must have a good credit history!
We would always advise you have your finances in order before you even begin to view properties for sale. First and foremost you need to reach an agreement in principle this will tell you what the bank will lend you and it will also let you know the terms and conditions of the loan. At this point you will know exactly what the bank will loan you and repayment terms.
You can now view properties knowing what budget you can comfortably afford. Once you have found your dream home you can make your mortgage application. The bank will want to see your proof of income, your address in the UK or anywhere else for that matter and your passport. It is now that the bank will perform a credit check just as they would in the country you are from.
The property you want to buy will now be valued by the bank; all legal requirements need to be checked and to make sure that the value is the price which was agreed by you and the bank. After valuation of the property you will receive a formal offer from the bank once they have checked all terms and conditions. You will need to sign the formal offer and return to the bank, the funds will then be released. On occasion you may be asked to visit the bank in person to sign the formal offer.
We always advise you to use the services of a solicitor and this final stage is arranged by your solicitor who organises the transfer of the Tapu (title deed) into your name.
A maximum loan of either 70% or 75% loan to value
Maximum term of loan amount is 15 years
Rates from around 6%
Turkey is usually a cash market however finance is available from a range of lenders, Turkish banks, European banks such as French and Dutch banks. They typically lend in Sterling and Euro – Sterling rates are around 6% and Euro rates are around 4% – they lend minimum loan amounts which are around £25,000 or £50,000 either Euro or Sterling and certain criteria applies and UK credit scoring is used. Loan to value (LTV) is typically 70% or 75% however if you do take out finance on a property in Turkey you need to take into consideration it is based on loan to value (LTV) not loan to purchase price as usually the valuation of a property will not equate to the purchase price, you need to take this in to consideration when making your calculations.
If you buy a property for £100,000 which is the property value, but the valuation by the property assessors (banks) is valued at £80,000 it means you get 70% of £80,000 not 70% of £100,000 for your mortgage, thus you need a deposit of around 30%. Lenders in Turkey prefer shorter lending terms therefore 10-15 years is considered the norm and around 6% is typical. Mortgages for foreigners are usually in Sterling or Euro and this is advisable for an overseas mortgage to avoid any exchange rate issues as the market fluctuates. Figures released in 2016 from global estate agents Knight Frank said that Turkey had the fastest rising house prices in the world. Prices had risen by 18.9% over the previous year compared with the 2.7% global average. This was due to high levels of foreign investment, a growing population; the median age in Turkey is just 30.2 years old (a young work age population) and construction had slowed down, which meant that property prices had begun to rise.
Foreign buyers are attracted by the affordability of Turkish property and according to the Turkish Statistical Institute (Turksat) official data the number of foreign buyers investing in Turkey in May 2018 rose by 36.1% year on year.
Contact us for advice and more information on Turkish mortgages.