Since 2006, the Turkish Government has allowed foreign investors to apply for mortgages in Turkey. Mortgages are now available from Turkish lenders in a variety of currencies from Japanese Yen to Swiss Francs and US Dollars and can be used for house purchases, re-financing or home improvements, providing the property is complete and ready for registration with you as the owner. There are some generous terms available and given the low cost of Turkish property taking out a mortgage could help you get a foot on the ladder.
What’s on Offer?
The minimum loan is around 25,000 Euros with a maximum of approximately 200, 000 Euros. You can borrow up to 85% of the purchase price although each individual lender has their own stipulations with 70% of the purchase price being more common in that this time. . Mortgages are approved on a repayment basis only over a 20 year term providing they reach their conclusion before you are 75 years old; some banks like HSBC, Sekerbank and Finansbank now offer 30 year terms subject to age and status. Interest rates vary according to the currency of the mortgage taken; interest on mortgages in Japanese Yen is currently 4.80% fixed for 10 years, 6.40% fixed for one year in Euros and 7.9% fixed for one year in Pounds Sterling. There are also longer terms available for fixed rate mortgages and some companies offer tracker rates. One of the conditions of taking out a mortgage is that you have to take out building insurance on the property and many brokers state that this has to be with the mortgage lender. Some companies will also give reverse mortgages, whereby an existing homeowner can convert some of the equity in their current home into cash and this money can be used in a variety of ways. The obligation to repay the loan is postponed until the owner dies r goes into a care home or the home is sold. You can not borrow more than the current value of your home. To raise finance in this manner you must be of retirement age or at least 62 years old. The costs of this type of mortgage are much higher than traditional mortgages and your heirs will be left with much less equity than they maybe anticipated. The Application Process
You can either approach a lender directly or use a mortgage broker. Whatever the case, you need to complete an application form and provide certified copies of your passports, proof of income either in the form of two years of accounts and tax returns for self employed people or three months worth of pay slips if you are employed and your latest P60. If you are using pension income to fund your mortgage you will need to show the relevant documents supporting this and if your money comes from existing income you will be classed as though you are self employed. Additionally, you need to show the last three months bank statements (six months I self employed), any loan or credit card debts including existing mortgages. The process once you have supplied all of these documents is very similar to that in most European countries although Turkish finance institutions are not always as fast in getting a mortgage offer to you. It is therefore very important to put a mortgage application in as soon as you decide that this is your preferred method of payment and you don’t have to be in Turkey to arrange your mortgage, everything can be done over the internet, just be sure to shop around for the best rates and terms. Buying Your Property
Once you have a written mortgage offer you can view property in your price range and make an offer. You will need to have received official clearance to from the Turkish Ministry of Defence, but most estate agents or vendors will organize this on your behalf as it is within their interest. You will need to show the clearance to the mortgage company. As you proceed with the preliminary contract, the mortgage company should be notified and informed of the property value and completion date. The lender will arrange for a valuation of the property to take place to determine that they will get their money back in the event of you defaulting on the mortgage. Once this has been done, the mortgage is released in line with the transfer of the title deeds into your name – the title deeds must be in the same name as the names on the mortgage. In the case of Off Plan property, your mortgage will only be released once the property is completed by the developer. You can still apply for a mortgage on an off plan property, but you will have to inform the developer that funds will not be available until completion and a full inspection has been carried out by the lender.Mortgages have always been the best way to finance property and the new flexible Turkish lending laws now mean that you can purchase a low cost holiday home with very favourable terms. Providing you are confident that you can maintain the loan then it is worth taking out mortgage financing, but you should be well aware that failure to repay can result in repossession.
