Many people dream of owning property overseas and even though property prices in Turkey have increased significantly over the last couple of years, it still represents great value compared to the UK. The vibrant culture, friendly people and stunning scenery make Turkey a popular choice for UK residents looking for a second home or investment.
In this article we’ll look at how to get a mortgage in Turkey as a UK resident, rules and criteria specific to Turkey, and how a specialist broker can help. We’ve also got a mortgage calculator, so you can see how much you could borrow.
Can foreigners get a mortgage in Turkey?
Yes, you don’t need to be a Turkish citizen or resident to buy a home in Turkey, and there are lenders, including local Turkish banks, willing to offer mortgages to UK residents. It’s worth noting that buying a Turkish property doesn’t automatically give you the right to live there – unless you spend over $250,000 and qualify for a golden visa, you may need to apply separately for a visa or residency, depending on whether you want to live in the property or use it as a holiday home or investment.
Speak to an Turkish Mortgage expert
Rules, lending criteria and deposit requirements
You will need to qualify for a Turkish mortgage based on the usual eligibility criteria including your income, deposit and credit history and the type and condition of the property you want to buy. If you can show that you can afford your mortgage and are a low risk borrower, there’s no reason why being a UK resident in itself should hold you back.
Most Turkish mortgage lenders will have stricter loan to value (LTV) requirements than you might be used to, with most capping at 70% or often even lower. If you’re concerned that the deposit requirement on a Turkish mortgage might be a dealbreaker for you then do speak to a specialist advisor. They may be able to track down lenders willing to go higher on the LTV or help you think about other ways to fund your purchase, for example through releasing equity in an existing property.
Aside from your mortgage, there are a few rules around buying Turkish property that you should keep in mind:
- Turkish property purchases are legally binding at an earlier stage than in the UK - once you find a home you like, you’ll pay a small deposit of a few thousand pounds, and this commits you to the purchase.
- As well as regular home insurance, you’ll need to organise DASK - compulsory earthquake insurance. Without this you won’t be able to get your Tapu issued. The Tapu is the property ownership document, similar to UK deeds.
- UK citizens can’t buy more than 30 hectares of property in Turkey.
- You’re not allowed to buy or rent property in military forbidden and/or military zones.
How to get a mortgage in the Turkey
As well as the usual mortgage preparations such as getting your documentation and payslips in order and checking your credit reports, there are some steps that you’ll need to take specifically to get a mortgage in Turkey.
Find a specialist overseas mortgage broker
Just like when you buy a house in the UK, getting yourself an experienced broker can save you huge amounts of time and money. In the case of buying property in Turkey, you’ll want to find a broker with specific experience in this market, who understands the ins and outs of the Turkish mortgage system and has connections with relevant Turkish banks.
Your broker will be able to research and shortlist mortgage options for you and guide you through the whole mortgage application process, ideally leaving you with very little to do on the financial side other than signing on the dotted line. We can help you to find exactly the right broker, so get in touch now and let us match you for free.
Get your Turkish tax number
In order to carry out any financial transactions such as opening a bank account or buying property, you’ll need to get a ten digit Turkish tax number. You can do this online or at any local tax office and it’s a straightforward process that should only take about 15 minutes as long as everything is in order. It’s free of charge and you’ll just need your passport as ID.
You can make payments for your house purchase directly from your UK account or via a money transfer service, but it will be useful to have a Turkish bank account for paying for any local services or smaller, ongoing bills.
Research and choose your agent and legal help
Once you’ve got your broker in place, you’ll want to think about the other people who are going to be part of the process, such as your estate agent and solicitor. Your broker may be able to make recommendations based on people they’ve worked with in the past, which is a good start, but make sure you research everyone thoroughly to check their credentials. Ideally, unless you’re a Turkish speaker, you’ll want to work with people who speak good English so as to avoid any miscommunication and help you understand each step clearly.
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How much could you borrow?
The amount that you can borrow on a Turkish mortgage will depend on several factors, primarily your income and other financial commitments. You may also be limited by your deposit, as most lenders will be looking for lower typical LTVs than if you were buying in the UK. Keep in mind that borrowing is based on the property valuation, not the purchase price, and this can often come in lower than the market value, meaning you’ll have to make up the shortfall.
That said, because average property prices are lower in Turkey than in the UK, the deposit amount may not be as prohibitive. Keep in mind too that Turkish mortgage terms tend to be shorter than in the UK – more like 10-20 years maximum – so monthly repayments will be higher than if you were borrowing over a longer period. A lot of lenders will also set minimum and maximum borrowing amounts, so make sure to check this.
To give you an idea of what you might be able to afford to borrow, why not use our mortgage calculator below? You’ll just need some basic information, and we’ll give you a rough guide as to what you may be able to borrow. Keep in mind that these are estimates – a specialist foreign mortgage broker will be able to provide more bespoke calculations for you.
Mortgage Affordability Calculator
Our affordability calculator can tell you how much you can potentially borrow from a mortgage lender. Simply enter your total household income below and our calculator will do the rest.
You could borrow up to
Most lenders would consider letting you borrow
This is based on 4.5 times your household income, the standard calculation used by the majority of mortgage providers. To borrow more than this, you will need to use a mortgage broker to access specialist lenders.
Some lenders would consider letting you borrow
This is based on 5 times your household income, a salary multiple you might struggle to qualify for without the help of a broker. This income multiple is not widely available to customers who are applying directly with a lender.
A minority of lenders would consider letting you borrow
This is based on 6 times your household income, a salary multiple you will struggle to get without a broker. Six-times salary mortgages are usually only available under very specific circumstances.
Get Started with an expert broker to find out exactly how much you could borrow.
Which lenders offer Turkish mortgages?
HSBC offers mortgages for overseas buyers in Turkish lira, with a maximum LTV of 65% and a 10 year term. Turkish bank Garanti BBVA offers non-resident mortgages, which can be taken out in lira or indexed to pounds, dollars or euros. The maximum term for the loan is 20 years and loans are capped at TL 500,000. EU residents are given a LTV of 65%, but if you live in a non EU country you’ll get 50%.
Finding the right lender for a Turkish mortgage is probably not something to attempt on your own from the UK, not least because of the potential language barriers. Your broker will be vital here in helping you find a bank in Turkey that’s open to considering a mortgage application from a UK resident. Borrowing from a European bank or an international bank such as HSBC (as outlined in the last paragraph) is also an option.
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What interest rate to expect
Interest rates for mortgages in turkey can be much more volatile than the U.K. Suffice to say then that you should be expecting to pay a much higher interest rate on your mortgage than you would in the UK. Rates for non-residents are also likely to be higher than for residents, and you won’t benefit from any of the reduced rate schemes created to boost affordability for locals.
Interest rates will also vary depending not only on the lender, but on your circumstances. You may also be offered a different rate depending on what currency you take your mortgage in. Once you have the right broker in place you can rest assured they will be doing all they can to secure you the most competitive rates.
Speak to a broker who specialises in Turkish mortgages
If you’re set on the idea of buying a property in Turkey but need help securing finance, the best thing to do is to speak to a mortgage broker who specialises in Turkish mortgages for foreigners. They will have an understanding of the Turkish mortgage market and relationships with lenders, saving you considerable research time. They will also be able to shop around and negotiate on your behalf to get you the best deals.
Give us a call now on 0808 189 2301 or make an online enquiry and we can take a quick look at your circumstances and find the advisor with the most relevant skills and experience for you. We can then arrange a free, no obligation chat, where you can discuss your plans and discover how a broker can help.