What is real estate financing and what are its conditions?

Everything related to real estate financing, including its advantages, disadvantages, and conditions, is covered in our following article at Imtilak Real Estate.

What is real estate financing?

Real estate financing is one of the most important facilities provided by the Turkish government to entrepreneurs wishing to invest in Turkey.

Based on the regulations stipulated by the Real Estate Financing Law issued in 2001 under No. 148 and Law No. 10 issued in 2009, those wishing for freehold property ownership can buy a home by obtaining a long-term mortgage loan from one of the official banks in Turkey.

In exchange for this mortgage loan, a mortgage is imposed on the property until the loan is fully repaid. In this way, the purpose of real estate financing is to facilitate the process of property ownership and encourage investments in Turkey.

The process of real estate financing is regulated under the supervision of the General Financial Regulatory Authority, in the presence of the three parties: the financier, the seller, and the buyer.

Advantages of using real estate financing to buy a home

The real estate financing system allows investors to purchase an apartment in Turkey by obtaining a bank loan of up to approximately 80% of the apartment's value. This percentage varies from one bank to another. In this way, the investor can save a large part of their savings instead of paying the full amount at once for the property, and can benefit from these savings in other investment sources.

Moreover, real estate financing guarantees the purchase of an apartment in Turkey through installment plans starting from a minimum of 3 months and extending up to 10 years at most. The installment period may also vary from bank to bank. Thus, one can own a property in Turkey and pay its dues like a tenant paying monthly rent.

On the other hand, among the advantages of real estate financing is the long-term payment of installments, as longer terms in real estate financing allow benefiting from lower interest rates. This contributes to increasing the value of the property and benefiting from its investment returns.

Disadvantages of real estate financing

One of the main disadvantages of obtaining real estate financing is the costs associated with interest rates. Some banks impose high interest rates on real estate financing, which may sometimes reach double the price of the apartment. The costs are not limited to high interest rates only, but also include real estate financing costs, closing fees, mortgage insurance, property taxes, and other unforeseen expenses.

On the other hand, long-term installments can be a double-edged sword. On one hand, they allow the apartment price to be paid in installments over specific periods, but on the other hand, the long repayment period over many years may become a burden on the property owner over time.

Among the disadvantages of real estate financing is not obtaining the title deed until all installments are paid. If the installment amounts are high and the payment period is long, this may involve some risks, especially when considering unforeseen circumstances that may affect a person.

What are the conditions for real estate financing?

Turkish laws impose certain conditions on foreign investors in order to obtain real estate financing. The most prominent conditions for real estate financing are as follows:

First: All installments must be paid within a period of no less than 3 months and no more than 10 years.

Second: The applicant for real estate financing must not exceed 80 years of age.

Third: Proof of documents confirming the amount of monthly income.

Fourth: At least 80% of the construction of the residential project must be completed.

Fifth: A copy of the title deed document for the property to be financed.

An overview of real estate financing in Turkish banks

Real estate financing in traditional Turkish banks

Traditional Turkish banks offer real estate financing services to those wishing to buy homes in Turkey. They provide mortgage loan services based on the interest system. The interest rates on loans in traditional Turkish banks range between 4.5% and 7.5%, provided that the value of the installments registered on the mortgage loan does not exceed one-third of the income. The most important traditional banks offering real estate financing services are Ziraat Bank, Garanti Bank, and Is Bank.

Real estate financing in Islamic Turkish banks

Some Islamic Turkish banks offer real estate financing services to foreign investors in Turkey. They allow obtaining a real estate financing loan with repayment terms very similar to those mentioned above and provide housing finance for periods up to 120 months. The financing terms set by Islamic Turkish banks are free from usurious installments and offer quick options for buyers seeking fast and easy financing without dealing with traditional banks. The most prominent Islamic banks offering real estate financing services are Kuveyt Turk Bank, Albaraka Bank, and Ziraat Katilim Bank.

Can foreigners obtain real estate financing in Turkey?

Of course, a foreign citizen residing in Turkey can obtain real estate financing in Turkey, provided they present personal documents related to their residence permit, passport, and some documents related to monthly income.

For property purchase services in Turkey, consult Imtilak Real Estate

Imtilak Real Estate offers you the possibility to buy properties in Turkey through installment plans suitable for various investor budgets. We offer the best opportunities for freehold property ownership through an installment system free from bank interest.

The installment system adopted by Imtilak Real Estate is also characterized by complete convenience in repayment, benefiting from currency differences, and obtaining the best price. In addition, we provide all services related to property purchase in Turkey from A to Z in a professional and guaranteed manner, ensuring the success of the real estate transaction in the best way. For more information about the installment system, you can contact the advisory team at Imtilak Real Estate.

Edited by: Imtilak Real Estate©