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Property Financing Options For Foreigners in North Cyprus

Created16.11.2023, 10.00
Updated27.11.2023, 11.03

While planning to buy real estate in North Cyprus, financing comes first. The budget determines property variables, from design to modernity, and location to investment value. When property buyers find the perfect property but cut short on the sales amount, they might look for other sources to catch up on the sales amount.

Financing Options for Property Purchases in North Cyprus

men-raporIn most cases, the main financing option is bank loans. However, there is another way to buy a home that goes over the budget, and it is developer loans. Here are a few words on financing options while buying property in North Cyprus:

Developer loans: Some developers and construction companies offer flexible payment plans with monthly payments to investors. The terms and installment options mostly vary from one investor to another.

This only applies in the case of newly built or under-construction properties that will be purchased for the first time. As for resale property, previously owned by another individual, all payments must be paid at once.

Bank mortgages: Both local and global banks in Northern Cyprus provide credit to foreign investors. North Cyprus’ banks offer a wide range of Mortgage packages. Credit plans can have varying interest rates and installment options from one bank to another.

Mortgages to Fund Property Purchase in North Cyprus

Buyers who fall short because of the lack of sufficient funds to buy real estate often choose to apply for a mortgage. If foreigners fully meet the requirements, banks in North Cyprus offer varying credit options.

Local and international banks in Northern Cyprus often fund up to 75% of the sales amount for installments up to 120 months. In most cases, the funded amount equals 50% of the purchase price for foreigners.

It is also essential to remember that the funded percentage will be calculated according to the appraisal report, not the actual sales price.

Let’s say real estate is sold for 150.000 USD. But its worth on the valuation report is determined as 100.000 USD. In this case, the bank will consider 100.000 USD value to fund the property according to the valuation report.

With a mortgage granted, the property will have a temporary encumbrance, just as an assurance. Some banks may require additional assurance just in case. Also while financing the sales amount with a mortgage, property and life insurance are must-haves. The insurance is strictly required.

The maximum credit term is limited to 120 months for mortgages in North Cyprus, which equals 10 years. Also, the funded amount can be paid in Turkish Lira or any other currency requested such as USD, GBP, or EUR.

There are both local and international banks in North Cyprus. Since they will also need to transfer money from their overseas bank accounts, property investors are recommended to work with banks with maximum global connections.

However, keep in mind that the type of the title deed is a significant factor in whether the mortgage is granted or not. There are different types of title deeds (Koçan) in North Cyprus, and some are not qualified to get a North Cyprus mortgage.

It is recommended to look for a Turkish Coupon (Türk Koçanı) or Equivalent Coupon (Eşdeğer Koçan) if the investor is considering a credit application. You can take a look at types of title deeds and other purchasing info from our property buying guide.

Who Can Apply for a Mortgage in North Cyprus?

homeForeigners can apply for getting a mortgage in North Cyprus. They also need to meet certain requirements such as being above 18 years of age. The foreign mortgage applicants must also have a valid passport.

Foreigners can only apply for a mortgage if they own a work permit or residency in North Cyprus. It is not possible to find North Cyprus mortgages for non-residents. First-time visitors and tourists are not eligible to apply for a bank loan to fund a property in Northern Cyprus.

Also to apply for a mortgage loan, foreigners need to prove that they have sufficient funds to live in North Cyprus. They might be requested to submit a statement of income.

The appraisal report will be the base source while determining the amount that will be granted to the applicant. In addition, the banks may add other criteria for credit applications. For example, the applicants may be requested to provide declarations of their ongoing loans, proof of employment, and their possessions.

Step-by-Step Mortgage Application in Northern Cyprus

There are 5 main stages of applying for a bank loan in North Cyprus. These are;

• Finding the Property: The first step is to find the right property. With the guidance of local professionals, you can find the best match in the blink of an eye.

• Getting the Purchasing Permit: To buy real estate in North Cyprus, investors should apply to the Council of Ministers to get permission. Applying for permission to purchase is the primary step of purchasing a property.

Here’s the catch: In order to get the purchasing permit, the property must have a title deed ready or the construction servitude must be completed. After applying, the permit will be granted within 4 - 18 months.

• Applying for the Mortgage: After making the downpayment, the applicants should conduct the mortgage application. This step comes right after investors get the purchasing permit with the required documents.

The required documents can differ from one bank to another. However, the most essential documents are the buyer’s passport, residence or work permit, purchasing permit, and wealth statement.

There might be additional papers requested, so it is always essential to follow the procedures with a professional consultant.

• Transferring the credit loan to the seller: If the mortgage is granted, the credit amount will be directly transferred to the seller’s account after signing the mortgage agreement. The payments begin according to the credit contract, which could be immediately or on a future date with deferred installments.

• Getting the title deed: After completing the whole payment, the title deed procedure will be conducted. It is highly recommended to proceed with an experienced local advisor just to make sure that everything goes by the book.

Costs of Mortgage Application in North Cyprus

peopleThe main cost for the mortgage is reflected in the amount that will be paid to the bank as an interest rate. However, there are one-time payments only required for the mortgage application process in North Cyprus.

You will need a bank account to get your mortgage. However, opening a bank account in North Cyprus is costless.

The appraisal fee varies based on the location and size of the real estate. Appraisal procedures are carried out by authorized professionals. The amount determined by the appraisal company as the appraisal service fee may vary. But the fee is often between €200 - €300.

A loan allocation fee will be charged once the loan is disbursed. This amount is calculated as 2% of the disbursed loan amount. Plus, an additional 3% as the bank insurance transaction tax will be applied.

A stamp duty of 0.5% is collected on the total loan amount stated in the loan agreement.

The DASK insurance fee and home insurance premium will vary based on the real estate appraisal report. These costs are calculated according to the property’s qualifications, such as location, space acreage, and more.

The cost of compulsory DASK insurance varies between €10 - €30. However, the expenses of more comprehensive insurance can increase by a lot, since it can secure more features including furniture and others.

Plus, there will be the costs of property conveyance such as Title Deed Conveyance Tax, VAT, Property Tax in Cyprus etc. You can view the costs of buying property in Cyprus from our “Property Purchase Costs in North Cyprus” page.

Looking For Assistance for the Mortgage Application?

The professional team of TEKCE can assist you through your mortgage application on your purchasing journey. Our experienced sales specialists who speak your language have full knowledge of which banks offer more advantageous credit packages in North Cyprus. Contact us today to start your new journey with TEKCE professionalism!




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