Housing in sunny Turkey is bought for recreation, investment or permanent residence. The demand for it is great, because prices are rising by 15-28% per year, depending on the location. What if you need to buy a house, but there is not enough money to the cherished amount? Of course, take it in installments or on a mortgage! Yes, in Turkey, mortgages and installments are available to foreigners, and today I will tell you under what conditions.

INSTALLMENT PLAN FROM THE DEVELOPER

There are three approaches to buying real estate – at your own expense, in installments or on credit. The installment option from the developer helps to fix the price and save on interest, even if you do not have the full amount at the time of purchase.

In addition, buying a home at the stage of excavation, you get it at a serious discount, i.e. cheap, and therefore, while the house is completed and prepared for occupancy, you will already have time to pay part or even all of the amount. The rest of the clients who purchase the object after its delivery by the construction company will have to pay 20-40% more than you for the same apartment – the exact amount will depend on the developer’s margin, location and other factors. Plus the percentage due to the dynamics of the market in 15-28% per year, which I have already mentioned.

Since the market is constantly growing, many investors take housing in installments, fix the cost, then pay it in several installments, thanks to which they benefit from those who entered this project later. This is a popular way in Turkey to make money on real estate, even if you do not have the full amount now. And if you rent out housing, it turns out that it pays for itself.

It is optimal to buy housing at the stage of excavation, because developers immediately provide installments broken down into equal amounts that can be repaid monthly, every quarter, once every six months or even once a year – all this is prescribed in the contract. With regard to documents, everything is very simple, because. You don’t need to provide anything extra.

Bank mortgage

The third option to get funds to buy a home is a bank mortgage. I note that foreign residents, as well as Turkish citizens, are eligible for mortgage lending, but with a limit of 50% of the cost of housing. For example, if an apartment costs 100 thousand euros, then you have the right to ask the bank for no more than 50 thousand euros. In addition, you will need to prove your solvency.

First of all, you need to choose an object that is available for bank lending. Only after that take up the choice of a bank with optimal conditions for you. We have this whole process in place, we have good contact with banks – we can guide you through this process by simplifying it as much as possible and taking care of most of the bureaucratic issues.

When evaluating an object, it is important for the bank to know what this property is from the point of view of the market. Bank employees look at the cadastral and market value of housing (it is usually much higher than the cadastral value), its history, in what condition, etc. For the bank, the basic documents are Iskan (technical passport) and TAPU (certificate of ownership). Simply put, the apartment must be liquid, and the documents for it must be in order.

There is a nuance that directly affects the successful receipt of a mortgage. According to the law, the bank focuses on the cadastral value, but the client and the seller work with the market price, half of which must finance the loan. The smaller the difference between the market and cadastral value, the higher the chances of obtaining a loan.

Suppose the market value of housing is 100 thousand liras , and the cadastral value is only 30 thousand. Since the bank can issue an amount not exceeding 50% of the cadastral value, this will not be enough to complete the transaction. Then the bank appeals to the developer with a request to increase the cadastral value to the market value. If the seller agrees, then the loan is freely issued.

Why can the seller refuse? In Turkey, there are certain limits in the pricing of real estate, above which the tax service will require an income tax of 18-28% on the amount added to the price.

This will significantly increase not only the cadastral, but also the real price of the apartment, in which neither the seller nor the buyer is interested. Therefore, it is important to find a seller who does not have such problems with taxation. All such issues are solved by the brokerage department of the Expert Property agency.

At the next stage, bank employees check the client’s package of documents and his solvency. To do this, you need to provide only three documents. This is a passport, TAPU (certificate of ownership), which is usually issued together with a broker (we take care of this issue), but the main thing is a certificate of income for the last 3 months from your place of work. It is needed even if the company is located abroad, in your country of permanent residence. To increase the loyalty of the bank, you can also indicate the presence of valuable property.

The certificate is drawn up in an arbitrary form – Turkish banks do not check it, do not submit requests to your country and to your place of work. However, the bank sets certain limits on your income, based on the cost of housing and the amount that it is willing to provide you. Your monthly income must be twice as high as this threshold, otherwise the loan will not be issued.

After that, in case of a positive decision, the last stage of verification and execution of the transaction begins – drawing up a contract and registering it with the cadastral office.

The contract is drawn up directly in this office – the whole procedure takes about 30 minutes. And all this happens in the presence of a bank representative – a lawyer who will make sure that all the numbers agree and the formalities are observed by both the buyer and the seller. Also, when signing, there is a broker (me, for example), a representative of the seller, a buyer and a licensed translator.

After registration of documents in the cadastral office, all the same, except for the translator, are sent to the bank, where a temporary bank account is opened, where the buyer transfers his part of the amount. There, after confirmation by the bank representative, the bank also transfers its part of the amount. Until the transaction is completed, the funds on it are frozen. After completing all the formalities, the seller receives money from this temporary account. For the buyer, this whole procedure is quite fast.

In addition, the bank representative imposes an encumbrance on the property. This means that the client will not be able to resell or transfer this home to anyone until the loan is repaid. However, all the time you pay the mortgage, you will be able to live in this apartment or house, and the price will be fixed at the time of the transaction and will not change regardless of the market situation or devaluation.

We help on all these issues, being a conduit between the client and the bank. All we need is a certificate of the client’s income for three months – we will draw up all other documents for the mortgage for you.

Which bank to contact: rates and conditions

My advice to you is that if you plan to take a long-term loan for 5 years or more, then never take a mortgage in euros or dollars – only in Turkish lira. Because the lira annually devalues by about 10% and, in general, this dynamics is close to the indicators of post-Soviet countries.

That is, every year the loan amount in lira will be reduced if you receive income in euros, dollars, rubles or other foreign currency. And vice versa, grow if the loan is in the dollar, and your income is in the Turkish lira or the currencies of post-Soviet countries, where the dynamics of devaluation are about the same as in Turkey.

In general, you can only borrow in euros or US dollars for a short period of time – for several months. For a year or more, this is already a risk. Nevertheless, banks will gladly give you a loan in USD with an average rate of 14-15% per annum.

As for lending in lira, then the rates are in the range of 16-19%. In Turkey, many banks work with mortgages, but large government agencies do not issue loans to residents of other countries. Banks such as Yapı Kredi, Ak Bank, Deniz Bank issue mortgages to foreigners.

There are also halal banks that issue loans to Muslims. These are Kuveyt Turk Bank and Al Baraka Bank. They have slightly different approaches to lending because they are guided by Sharia law and the loan will be considered charitable assistance. However, in general, the average rate will be about the same – about 18%.

In our experience, the easiest way to work is with Deniz Bank, although it has a percentage of 18.5 % in lira – somewhere around 0.5 % or 1% higher than other banks. Approximately 70% of the mortgages of our foreign clients are carried out through this bank, because it is the most loyal to foreigners. Another 15% in Yapı Kredi Bank with a rate of about 17.5%. The rest is from other banks, but the volume of transactions there is insignificant.

Among halal banks, we are more likely to conduct mortgages through Kuveyt Turk Bank. Halal banks conduct a more in-depth analysis of customers, pay attention to the scope of their activities and other factors, as required by Sharia . For example, if you work in the field of selling alcohol, then the halal bank will definitely refuse to finance you . At the same time, the final percentage will be about the same as that of secular banks – about 18% per annum, but the payment of the commission will be formalized as a charitable contribution.

I can tell you more detailed information about secular and halal banks, about their current loan rates and conditions in messengers – contact me, I am always ready to give advice!

Misconceptions in the market and questions from customers

As I wrote earlier, market dynamics and the opportunity to buy housing at the pit level allow you to earn even without having the full amount to buy real estate in Turkey.

I will also tell you a little about the misconceptions that some of our colleagues are spreading. In particular, that in the Istanbul region, foreigners are not issued mortgages. This is not so, mortgages are issued there. At least, our clients, with the help of Expert Property specialists, have done it quite successfully.

Another misconception is that it is impossible or very expensive to repay the loan to the bank ahead of schedule. It’s not that. You can return it, but you will have to pay a penalty on the balance of the amount in the amount of 2%.

Dear friends, if this topic was useful and interesting to you, but you want to know more about the rates and conditions of mortgages in Turkey for foreigners, then write or call me. I am always ready to help you!

Take care of yourself and your loved ones!

Yours Tatiana Güneş