How to Get a Mortgage: Step-by-Step Process

A mortgage is a long-term loan secured by placing a lien (ipotek) on the home being purchased. Loans that fall under housing finance are exempt from the Resource Utilization Support Fund (KKDF) and the Banking and Insurance Transactions Tax (BSMV), which makes them cheaper than general-purpose loans.

1. Pre-approval

Getting pre-approval from the bank before you start house hunting clarifies your budget. The bank evaluates your income, credit score, and existing debts and gives you an approximate amount. Since no specific home has been chosen yet at this stage, the approval isn't final.

2. Documents

• ID and proof of address
• Proof of income (payslip, social security (SGK) service record, or for the self-employed, tax registration certificate and income statement)
• Title deed details of the home being purchased and the seller's information
• Additional documents that vary by bank

3. Appraisal

The bank has a licensed appraisal company prepare a report to establish the home's value and legal status. The value in the report sets the upper limit on the loan amount. The report fee is usually paid by the buyer.

4. Approval and contract

If the assessment is positive, the loan is approved and the contract is signed. The contract states the interest rate, term, total repayment amount, and any fees. Mortgages can carry a loan origination fee; the cap on this fee is set by regulation.

5. Title deed day and the lien

The loan amount is usually transferred to the seller's account at the same time as the title transfer, and the bank's lien is registered on the title deed in the same transaction. Lien transactions under housing finance are generally exempt from the title deed fee.

What to watch for

• Look at the total repayment amount, not just the interest rate; total cost rises quickly as the term lengthens.
• Ask whether insurance products are mandatory; some banks require life insurance.
• Remember that payments can increase with variable-rate options.
• The loan may be declined if the home lacks an occupancy permit (iskan) or condominium ownership (kat mülkiyeti).