Caveat Emptor. The Turkish Government now allows non-residents from 84 countries to buy property in Turkey and to obtain mortgages. The ability to finance the purchase of property in Turkey with a mortgage is relatively new and so the market is in it's infancy and is growing and changing rapidly.

Turkey has a vibrant and innovative banking sector but beware the Turkish Lira is still the national currency even though properties marketed to foreigners are priced in euro. Locals will buy property in TL at much cheaper prices than foreigners away from the hotspots being created by developers, so although holiday property may seem cheap by UK values, in local values you may be overpaying. If you are overpaying the property may not value up to the price you have agreed and you will have to put more of your own cash into the deal or renegotiate the price.

Do not be thinking that things are the same in Turkish mortgages as in the highly regulated UK mortgage market. In Turkey there is no control on how the interest rates lenders quote are calculated, so comparisons are very difficult. We will always look at the Total Repayment Amount as being the only true basis of comparison between products. ( That is how much will you repay the lender for this mortgage over the whole life of the mortgage.)

Your first step should be to agree a mortgage in principle before you go shopping for property, so that you have a budget and you know what you can afford.

Mortgages can be had to a maximum of 75-80% LTV on a repayment basis only from local lenders. All mortgages are full status so you will need proof of your income and expenses. The potential rent from your Turkish Property may be taken into account when calculating affordability. Turkish lenders will want to see that with the costs of the mortgage your monthly fixed expenses do not exceed 35% of your proven monthly income.

Up to 4 people may jointly buy one property. The maximum age limit is 70 at the completion of the mortgage, so although a 20 year term is available, if you are 55 then 15 years will be the maximum. The minimum term is 7 years. Life insurance is a requirement and is sold integral to the mortgage. Building and earthquake insurance will also be required.

Once you have been offered a mortgage in principle it is essential that your next step is to obtain Military Clearance. It ıs a pre-requisite to ownership, and in some cases the vendor will offer to do this for you..

There are 2 types of Military Clearance.

• One, to clear the land for foreign purchase it should not be in a military sensitive area.

• Two, on the individual buyer/s to check that the buyer is not a fugitive, criminal or terrorist! Your lawyer or representative or you yourself (not recommended) sends a translated and notarised copy of your passport/s together with the title deeds (Tapu) to the local military authorities in the area you are buying. This process can take 2-3 months and the seller has to agree to wait while it is obtained because the banks will not release the funds without it. There are some rules concerning the size of investment holdings, which normally restrict investors from owing more than 25% of a development.

Note: TAPU: 3 types:

1. TITLE DEEDS : for Land only (ARSA)

2. KAT-IRTIFAKI showing the individual plots/properties

3. MESKEN – showing present ownership of individual property.

Your vendor should provide you with either (2) or (3) for your mortgage application.

Your vendor should also provide the Habitation Certificate from the local municipality to say that the building and the development is completed and fit to be occupied.

The Title Office in the local municipality registers land ownership. Your lawyer will go there in person (with your power of Attorney) to change the Title from the Seller to your name. The vendor has the responsibility of first organising this.

The Bank then put a charge on the Turkish Title Deed.

Note: Each region processes applications at differing speeds. In Istanbul in can be in days – in Bodrum several months. The fees charged also vary widely.