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After the Turkish government passed a new mortgage law in February 2008, Turkish banks based in Turkey and London have introduced new mortgage deals designed to make it easier for British people to invest in Turkish property.
Overseas Mortgages are now specifically available to UK nationals buying completed Turkish properties with the Turkish Is Bank, London branch. In Turkey, Denizbank, Is Bank, HSBC and Akbank’s are among the banks which offer mortgages to UK residents.
Nationals of all countries that have a reciprocal agreement with Turkey can buy property in Turkey (after the Ministry of Defense’s approval) and apply for a mortgage. There is no upper limit for mortgage loans, but the minimum amount is €30.000. Off-plan mortgages are available with full bank guarantees from the developer for the total loan amount.
Mortgage loans are available in Sterling (pounds), Euros, Dollars and YTL (Turkish Lira). Interest rates vary depending on the currency in which the loan is taken, the type of the property, either off-plan or completed projects and other economic factors. Interest rates at the moment are around 7.8% for Sterling and 6.6% for Euros. Only fixed rate mortgages are available.
The applicant should be at least 25 years of age to be able to apply. Mortgage repayments are available for up to 20 years. Monthly instalments are automatic payments from a bank account. Joint applications can be made for a mortgage on the same property.
For completed projects, banks offer mortgage loans up to 75% of the property’s appraisal value (not always equal to the sales price). Mortgage offers are also available for off-plan projects. But this option is only available when the developer is very well known, reliable and offers a guarantee to the bank. The Banks offer mortgage loans up to 60% of the appraisal value of the off plan property. Property Valuation is done by the bank.
Early payment is possible, but a 2% penalty fee is charged within the first three years after taking the mortgage loan. The standard debt to income ratio is at its maximum total loan instalments at 50% of net salary income. The mortgage offer is valid for 4 months, and an extension of validity of the pre offer (except the interest rate) is available up to 18 months (1% extra commission required).
Required permissions and insurances for buying property and taking mortgage are:
· Approval of the Ministry of Defense
· DASK (nature disaster insurance-home insurance)
· Life insurance (not compulsory)
· Tax number for opening a demand deposit account
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