Finance property in Turkey: cash, instalments, loan

Most buyers from the UK and Europe finance property in Turkey with their own funds. If you do not have it all in the bank, you use the developer’s instalment plan or a loan against a property back home. Turkish bank loans for foreigners are rare and expensive, so do not count on one. We work out which option suits you before you choose a property.

The good news first: the sums are often smaller than you are used to back home. Flats in Alanya start well under 100,000 euros, and villas with a pool and sea view cost correspondingly more. For many people, what is left after selling a car, an inheritance or twenty years of saving is enough. You sit on the balcony in Mahmutlar in February, the flat is paid for, and there is no instalment going out in March.

Finance property in Turkey: option 1, own funds

The simplest way and the most common. You transfer the purchase price from your home bank account to your Turkish account, and from there it goes to the seller on the day of transfer. No Turkish bank, no credit check, no paperwork except proof of where the money came from.

Budget for the purchase price plus roughly 4 to 5 per cent in additional costs, plus VAT for new builds, and a cushion for furniture, air conditioning and the first few months. On a purchase price of 100,000 euros that comes to around 105,000 euros plus furnishing. What exactly applies to your property is in the guide to additional costs.

Option 2: instalments with the developer

Many developers in Antalya, Alanya and Mersin offer payment plans: a deposit at signing, the rest in instalments during construction, sometimes for months after handover. This is not bank finance but a contract with the developer. As a rule there is no interest, but the price with instalments is often a little higher than with full payment.

What we look for: the plan is in the contract in writing, with a date and an amount for every instalment. It is clear when the Tapu (title deed) is transferred to you, usually after the last instalment. And the developer has finished its earlier projects and handed them over with Iskan (occupancy permit). We check that before you pay the first instalment. If you want to buy a flat in Turkey and are two years from retirement, instalments are often the right bridge.

Option 3: a loan at home against a property you already own

Banks at home usually do not finance a property in Turkey, because they cannot register it there as security. What they do finance is a property back home that belongs to you and still has free equity. You take out a loan against it, the money is freely available to you, and you buy in Turkey as a cash buyer.

The advantage: you get the terms your bank offers for property loans at home, and the purchase in Turkey goes as fast as with your own funds. Whether this makes sense depends on your situation at home, and you discuss that with your bank. We supply the documents on the property for it: the brochure, valuation report and cost breakdown, if the bank wants to see them.

Option 4: Turkish bank loans for foreigners

Turkish banks only rarely grant mortgages to foreigners. When they do, it is at a high interest rate, with short terms, a large down payment and a lot of paperwork. Then there is currency risk if you borrow in lira and earn in pounds or euros. We give no figures here, because they change quickly and differ from bank to bank. Our experience: almost nobody from abroad goes down this road, and we do not recommend it. If you want to look into it anyway, we will ask the banks on the ground for you.

Currency and transfer

In practice the purchase price is usually agreed in euros, sometimes in lira or US dollars. Payment goes through your Turkish account, which you need for the purchase anyway. You can control the timing of the currency exchange: if you transfer early and leave the money in euros in the account, you only exchange on the day of payment. We go to the bank with you and clarify which fees apply to the transfer, so the final sum is right.

What we calculate for you

Before you commit to a property, you get a statement from us: purchase price, Tapu fee, valuation report, DASK (compulsory earthquake insurance), translations, VAT for new builds, plus the running costs per year with property tax and Aidat (monthly service charge). From that you see what you really have to put in. If a property blows your budget, we say so and find one that fits. Advice costs nothing, and we do not push.