Financing your property

Loans and mortgages in Turkey

Since Islamic law forbids interest transactions, some Turkish banks offer both “deferred sale finance” and “lease to own” mortgages to circumvent the restrictions.

Financing your property

In a deferred sale mortgage, the bank buys the property and immediately sells it back to you (for a higher price, of course). After making a 20 % initial payment, you then pay the balance on a monthly schedule.

Lease to own mortgages allow you to avoid a large initial deposit. The bank buys the property and then rents it to you on a monthly basis. The “rent” includes charges that purchase you increasingly larger shares in the property until you own it.

The only way these restrictions will affect you is if you apply for a mortgage at a bank that identifies itself as Islamic. Secular Turkish banks offer standard mortgages.

Mortgages from Turkish banks

You can finance your property in Turkey using local Turkish banks, but Turkish financing is ultimately more expensive than in France, the UK, Germany or other European countries. More importantly, going into a local Turkish bank and applying for a mortgage will be nearly impossible if you do not speak fluent Turkish.

Another option is to use one of the Turkish banks with European branches for your mortgage. You will find multilingual advisors at these banks who are familiar with Turkish property transactions. Isbank  is one such bank, and it has offices in Germany, the Netherlands, France, and Switzerland. You can use an account from any of these branches in Turkey without complication.

Real estate mortgages are recorded in the Turkish land registry. No bank will provide a mortgage without a valuation report stating the value of the property and noting any restrictions listed in the land registry. This process makes mortgage credits much safer for Turkish banks than for banks in many other countries.

Take careful note of the inflation and exchange rates if you are paid in a high-value currency such as the euro, the British pound, or the U.S. dollar: if the Turkish Central Bank cuts short-term interest rates to combat inflation, the Turkish lira may gain unexpected value against your income.

Applying for a mortgage

After you choose a bank, gather all relevant information about the property you are purchasing and bring it to the branch´s mortgage specialist. You will need to fill out an application form to have a bank appraiser value your property. Though you will have to wait for the completed appraisal before moving forward, rest assured that this process is usually quite efficient. After the appraisal, you will be given a preterm sheet that you are required to sign. You then have to pay a processing fee.

Check with your bank for required documents, and be prepared to present all of your financial records. Tax receipts, banking information, and utility bills are all required, among others.

Mortgage approval for foreigners

Obtaining a mortgage approval from a Turkish bank is surprisingly common for foreigners. Foreigners apply for different loans than Turkish citizens, and these loans have different designations. The mortgage approval rate remains high, and mortgages often cover up to 65% of the property´s cost.

In a deferred sale mortgage, the bank buys the property and immediately sells it back to you (for a higher price, of course). After making a 20 % initial payment, you then pay the balance on a monthly schedule.

Lease to own mortgages allow you to avoid a large initial deposit. The bank buys the property and then rents it to you on a monthly basis. The “rent” includes charges that purchase you increasingly larger shares in the property until you own it.

The only way these restrictions will affect you is if you apply for a mortgage at a bank that identifies itself as Islamic. Secular Turkish banks offer standard mortgages.

Mortgages from Turkish banks

You can finance your property in Turkey using local Turkish banks, but Turkish financing is ultimately more expensive than in France, the UK, Germany or other European countries. More importantly, going into a local Turkish bank and applying for a mortgage will be nearly impossible if you do not speak fluent Turkish.

Another option is to use one of the Turkish banks with European branches for your mortgage. You will find multilingual advisors at these banks who are familiar with Turkish property transactions. Isbank  is one such bank, and it has offices in Germany, the Netherlands, France, and Switzerland. You can use an account from any of these branches in Turkey without complication.

Real estate mortgages are recorded in the Turkish land registry. No bank will provide a mortgage without a valuation report stating the value of the property and noting any restrictions listed in the land registry. This process makes mortgage credits much safer for Turkish banks than for banks in many other countries.

Take careful note of the inflation and exchange rates if you are paid in a high-value currency such as the euro, the British pound, or the U.S. dollar: if the Turkish Central Bank cuts short-term interest rates to combat inflation, the Turkish lira may gain unexpected value against your income.

Applying for a mortgage

After you choose a bank, gather all relevant information about the property you are purchasing and bring it to the branch´s mortgage specialist. You will need to fill out an application form to have a bank appraiser value your property. Though you will have to wait for the completed appraisal before moving forward, rest assured that this process is usually quite efficient. After the appraisal, you will be given a preterm sheet that you are required to sign. You then have to pay a processing fee.

Check with your bank for required documents, and be prepared to present all of your financial records. Tax receipts, banking information, and utility bills are all required, among others.

Mortgage approval for foreigners

Obtaining a mortgage approval from a Turkish bank is surprisingly common for foreigners. Foreigners apply for different loans than Turkish citizens, and these loans have different designations. The mortgage approval rate remains high, and mortgages often cover up to 65% of the property´s cost.

Further reading

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