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Turkish Mortgages: For Foreign Buyers of Property in Turkey

The Turkish Mortgage system came into effect in January 2007. Since then Turkish mortgages have become available for foreign buyers of Turkish property where a reciprocal agreement exists.

At this time only repayment mortgages are available with loan terms of 5 to 20 years on residential property. Finance can be arranged in most major currencies including Sterling, Euro and Dollar as well as New Turkish Lira. Mortgages may be granted for the purchase of a new property or the re mortgage of currently owned property. Off Plan mortgages are not yet widely offered and can only be arranged when the developer has secured mortgage finance against the development from the same bank.

Key Mortgage Points:

• Mortgage Type: Repayment with fixed or capped interest rate
• Loan Term: 5, 10, 15, 20 years
• Loan to Value: 70%
• Debt to Income: 50% of nett income may be used again monthly repayments
• Max Amount: No Limit
• Min Amount: 30.000 Euros
• Age limitation: Minimum age of 25 and maximum age of 70 at maturity date.
• Offer validity: 4 months
• Early repayment penalty: 2% of outstanding capital amount

Mortgage Process and Costs:

Credit report

This requires completion of the banks application forms and submission of accompanying documentary evidence of salaries etc. The originals must be sent to the bank along with a fee of approximately 100YTL per applicants for processing. Within 5 days the bank will confirm if they will lend based on your credit rating and how much.

Property Valuation

Once you have decided which property you would like to purchase the bank will send their valuer for the valuation report. Some documents will need to be supplied from your agent or lawyer regarding the property.

Valuations cost approximately 450YTL per property and are non refundable

Mortgage Offer

Based on the credit report and property valuation a final mortgage offer made. If you accept this offer a 1% commission is generally charged from the bank at the time the loan is drawn down. The offer lasts for up to 4 months but can be extended up to 18 months with the payment of an additional 1% fee.

Notes:

• Joint applications are handled separately. Each party will be assessed individually for their credit rating and separate mortgage offers will be issued.
• When arranging a re mortgage any rental income achieved on the property will be taken into consideration in the credit report
• The banks will not lend on any property technically classed as commercial. This may include sea front residential property as well as some ground floor apartments.
• Responsibility for signing for the mortgage can be covered under the power of attorney for the purchase of property to your lawyer