Eligibility for Turkish Mortgages

At the Turkish Property Agents we work with a panel of experienced overseas mortgage brokers. If you are considering taking out a mortgage for your Turkish property purchase it is important to establish early on if you will be eligible or not. We would recommend you do this as early as possible in the process so that you don’t end up with unnecessary mortgage rejections on your credit score. This early approach can save you time and also money, as you won’t be wasting fees applying for mortgages you will be unlikely to obtain.

Can I get a mortgage in Turkey?

There are plenty of options for financing your Turkish property purchase, including banks, mortgage providers and developer finance. Terms and conditions will vary, and getting approval will depend on the specific product and how the provider views you as a potential borrower.

Lenders or Developers may look at your:

• Employment Status (Salaried vs Self-Employed vs Company Owner)
• Income (evidenced over last three years)
• Nationality and Country of Residence
• Age
• Credit History
• Property Type – what are looking to finance?

Lenders need to feel confident that you can afford the monthly mortgage payments, and and a macro level that you are a trustworthy individual who will pay back the loan over the long-term. Whilst you might think it is a ‘no brainer’ to have your purchase financed, for the lender it is a question of risk.

We work with mortgage brokers who have deep experienced of helping international buyers to obtain mortgage finance for a property in Turkey. Their bilingual team will do a lot of the heavy lifting and help you to select the right solution.

What documents will I need for a mortgage in Turkey?

Preparation is key, and you will want to ensure that you have the following documentation ready for the broker to assess. Depending on the lender, some of the following may need to be translated.

• Proof of identity (passport etc)
• Proof of address (documentation dated within last 3 months)
• Last 3 months payslips (salaried)
• Latest P60 or Employer’s Reference (salaried)
• Last two year’s audited accounts (salaried)
• Personal tax returns for last two years
• Your last three months personal bank accounts

What is the Income-to-Debt Ratio?

Every lender will have different criteria for Turkish mortgages, so it is important to use a broker who can help you to calculate your affordability and see how you measure up against the lender’s criteria.

One eligibility criteria which is common across all Turkish lenders – and much of Europe – is the income-to-debt ratio.

You will need to able to provide the broker with details of debt you pay off monthly (mortgages, credit cards, loans, car payments etc).

In Turkey your total debt (including mortgages in your home country) cannot be higher than 35% of your net income. This is a mechanism used widely across Europe to ensure loans are affordable. This is important to bear in mind and it can catch many people out – they have a reasonably high gross income, but equally a lot of outgoings which can damage your chances.

How much could you borrow with a Turkish mortgage?

If the average borrower is able to meet the requirements, most lenders are able to offer a loan-to-value (LTV) of 65% to 70% of the property price. In some cases, 75% can be achieved.

If you were buying a property in Turkey for, say, €150,000, you would be able to borrow approximately €112k. Or, in other words, you need to be able to put down a 25% deposit.

Do I need a strong credit score to get a mortgage in Turkey?

Whilst credit scores (provided by Credit Reference Agencies – CRA) are important, they are not the only factor for a successful loan. Yes, they are an important indicator as it will give the lender an idea of your financial prudence. That said, lenders know that every CRA uses slightly different criteria so there is no single empiric measure.

Whilst aiming for a good credit score is important and useful, equally important will be your evidence of income , bank statements, how you manage your money etc. Also, a credit score isn’t necessarily reflective of your income or your ability to repay a mortgage today.

What if I am not eligible for a mortgage? Are there other options?

Luckily, a mortgage from a Turkish bank isn’t your only financial option. Turkey was always traditionally a cash-based real estate market, and it was only in 2007 did

mortgage finance open up to foreign investors. As a result, many developers are able to offer structured repayment plans, often at much lower interest rates – or even interest-free. The term of the loan is not as long as a traditional Turkish mortgage (10-15 years) – perhaps more like 3-5 years – but it is a useful option if you want to spread your payments.

If you are looking to buy an apartment or a villa in a major resort area, chances are (subject to status) you’ll have both routes open to you. Unfortunately if you are looking to buy away from the most common locations – for example, further inland, more rural etc – you won’t necessarily have any finance options as there would be a greater risk for the bank.