Turkey is home to some excellent real estate properties. With so many properties being developed in the country, it seems it has continued generating interest among various eager buyers. Turkey has some of the fastest-rising prices in residential property globally. In over 10 years, there has been a 902% increase in the prices of residential properties.
The Turkish real estate market has more sellers than buyers, meaning there is more supply over demand. However, houses are fairly affordable in comparison to many parts of the world. This is why numerous foreign buyers prefer to purchase properties in the country. Official statistics show that the total number of foreign homebuyers had a 43.50% increase in 2021.
Buying a house in Turkey? You may need a mortgage.
Turkey has some of the most affordable house prices in Europe. However, you may not be able to purchase property in the country still out rightly. This also happens in many countries like the UK, France, Spain, etc. Therefore, you may want to take a mortgage to finance your home-buying process. A mortgage is one of the ways that you can finance your property purchase in Turkey.
How many types of mortgages are there in Turkey?
You can finance your home-buying process in Turkey with one of two possible mortgage types. These are:
The principal mortgage: The principal mortgage is the most common type of mortgage. Here, the home-buyer and the lender agree on a fixed amount.
The limit mortgage: With this mortgage type, the mortgage is used to finance the upper limit price of the transaction. This type of mortgage is usually used in a property purchase where you do not know the price.
Taking a mortgage in Turkey
If you are looking to take a mortgage in Turkey, you should start as early as possible. Even when you are not sure of what properties to buy, you should start planning for your mortgage. Also, you want to establish your budget for the house — this is the amount of money you can afford to spend on the house. Considering your credit status, you will be advised on the amount of money you can get. In Turkey, you can get loans of up to about 50%. Also, mortgages are available for foreigners; this was started in 2007. You can get a lending duration of about 10 to 15 years.
The current mortgage rate in Turkey
With so many home-buyers looking to purchase their dream homes, mortgages are one way they can help achieve this dream. The current mortgage credit interest rate in Turkey is set at 17.79%. This is the official figure the Central Bank of the Republic of Turkey provided. Between August 2022 and March 2023, the Turkish mortgage rate showed considerable fluctuations. It started at 18.79% in August 2022 and peaked at 21.45% in November 2022.
It then started a steady decline from December 2022 with 19.97% and settled at 17.79% in March 2023. It is important to note that within the observation period, the lowest mortgage rate was recorded in March 2023. This means that the mortgage rate in Turkey is currently at a low tide. Therefore, now is a good time to take out mortgages for houses.
Accessing mortgages in Turkey
As a foreigner in Turkey, you can access mortgages to finance your home purchase. This is usually called the maximum loan-to-value percentage. This has been fixed for foreign nationals that are looking to buy real estate in Turkey. Currently, the maximum loan-to-value percentage for foreigners is pegged at 70%.
This means that if you are looking to take a property mortgage on a house that is valued at $100,000, the foreigner is only eligible to access $70,000 of the cost. Then again, most financial institutions and banks in Turkey may not consider mortgages under $60,000 to $70,000. This is especially common with foreigners — because they have to be certain that the deal is worth all the hassles.
