Buying Property in Turkey | Eligibility Requirements for a Loan
Those who dream of owning a home apply for a housing loan by choosing the most suitable loan from loans offered by various banks. In our previous article, we described what you need to do to get a housing loan. Nowadays, it is a great advantage to get a housing loan. But before applying to banks in order to obtain a housing loan, the property should have an eligibility report issued by a property expert for the real estate loan. Our article will discuss property eligibility requirements for a housing loan.
Determination of a Property's Eligibility for the Loan
A value report issued by a property expert sent by the bank is required to determine a property's eligibility for the loan. But the bank approves the loan application only if this report is suitable for the housing loan. When the property documents for the housing loan are examined, the first thing to come to mind will be construction servitude or condominium. Construction servitude is the title deed that will be used during the period between the date of initiation of the construction and the date on which the inhabitability license is obtained. On the other hand, condominium defines how a property is acquired legally. A property with a condominium report carries less risk compared to a construction servitude.
The second requirement is the completion rate of the property, but each bank is likely to give a different rate. In general, the property is supposed to be completed by 80 percent at a minimum. If installation of doors and windows has been completed and the property has deficiencies only in the internal structure, it is usually deemed satisfactory. The third requirement in the expert report is that no unusual changes have been made on the project. The final requirements for property eligibility for a loan is beyond control of the housing expert. This requirement is that all shareholders give consent for bank mortgage.
Cases Where The Property Isn't Eligible For a Loan
While a property is being evaluated for its eligibility for a loan, an expert may issue a negative assessment of the project if the property is used for a purpose other than the project submitted to the municipality or if it was constructed in an improper manner. Because this may indicate that the project will not meet the specified loan and the loan application may be rejected due to this element of threat. The loan obligation of the projects that have not completed the 80 percent completion rate mentioned above but have been considered eligible for a loan by the bank belongs to the contractors and project companies. In addition, if the purchased property has a title deed with shares, all shareholders must give consent to the sale of the property. If the property does not meet these requirements and constitute collateral, it will not be eligible for a housing loan.
Lastly, the most important requirement for a property's eligibility for a loan is that there mustn't be any other mortgage on the title on the title deed of the property. Banks give priority to having a first degree mortgage right on the property to be purchased while disbursing a housing loan. For this reason, the bank will not grant you a housing loan if there is a first degree annotation, lien or mortgage on the property. In that case, mortgage transfer should be performed between the banks.
Considerations Before Property Expert Check
You can make observations on your own to establish whether or not the property meets the abovementioned requirements and make a check before paying for the Property Expert to be sent by the banks. For example, if the property has two floors, an additional door should not be opened for the second floor of the dublex apartment. Observing this situation, which will be deemed as contrary to the project, is a situation that you should particularly watch out for among the requirements for a property's eligibility for a loan. Another check that you will make before applying for the housing loan is that the property is not included in the definition of dwelling on the title deed, that is, it is important that the property is not a commercial property. If it's a commercial property, in other words, if it's a "shop", you need to obtain a housing loan with commercial feature for that property.
A commercial loan will cause you to be taxed and be subject to a condition exceeding your maximum loan amount. In short, additional structures or any condition that is visibly contrary to a housing loan is a situation about which you should exercise caution before consulting an expert. Considering the matters we have mentioned above, whether a property is eligible for a loan should be established in line with preliminary checks you need to make, in addition to the check to be made by the property expert.
Properties Not Eligible For a Housing Loan Can Be Bought!
In Turkey, properties not eligible for a housing loan can be traded. It is observed that properties are bought even if the loan conditions are not suitable for selling properties in the regions with unplanned urbanization, where urban transformation is not applied. The fact that a property's conditions make it eligible for a loan is important in terms of safety, even if a housing loan is not sought. Even if the first choice is to buy a property eligible for a loan, properties that do not meet the requirements but do not pose a problem in terms of safety are also preferred. Increasing the number of floors that should be constructed as per the construction permit poses a problem in terms of eligibility for a loan. Although rare, the municipality demolishes unlicensed floors, which is a practice which allows that the requirements for a loan are met. Another danger is that some properties have conditions that cause them to lose their right of undergoing urban transformation.
Today, most of the existing buildings have these dangers because they are old settlements. Many buildings without construction servitude are preferred. For this reason, even if the loan is not withdrawn, the fact that a property has conditions making it eligible for a loan should be the primary reason for preference. You should consider a property's eligibility for a loan while filing an application for a housing loan or even if you do not seek to obtain such loan.