Turkey · Money and mortgage
How to choose a mortgage in Turkey and not overpay the bank
Compare not by the interest rate but by the total cost of credit (YMO): the difference between fixed and variable rates, optional insurance, the right to early repayment.
Mortgage advertising always shows the most attractive rate. But two banks with the same nominal rate can differ by 20–30% in real cost. The file-opening fee, mandatory insurances, valuation and early-repayment penalty — in total they change the picture. This guide teaches you to read not the bank's advertising language, but the real numbers.
§ 01
Total cost of credit: the only correct yardstick
- 01Compare by YMO, not by the nominal rate
In Turkey banks are required to disclose the 'annual cost ratio' (YMO — yıllık maliyet oranı), which includes the mandatory fees and insurances. Use YMO when comparing: the nominal rate can mislead.
- 02Ask for the total amount payable
Ask the bank, or use a credit calculator: what is the total amount payable over the full term of the loan? That is the fairest point of comparison. For a ₺1.2 million loan the difference between two banks can amount to ₺200,000–400,000.
- 03Separate the non-mandatory costs
Some banks present life or property insurance as a condition of approval. But you are entitled to buy insurance from another company. The bank's insurance can be 50–100% more expensive than the market. For every item ask: is this really mandatory, or is there an alternative?
§ 02
Fixed or variable rate
- 01The guarantee of a fixed rate
Under a fixed rate, the monthly payment does not change for the entire term. This is a huge plus for budgeting. If rates rise, your 'freeze' becomes even more advantageous. For families with a fixed income or a tight budget, fixed is generally safer.
- 02Risks of a variable rate
A variable rate (linked to TLREF or another index) looks attractive if rates are expected to fall. But if they rise, the payment and the overall debt rise too. Soberly assess how long you are willing to carry that risk.
- 03Study hybrid options
Some banks offer a fixed rate for the first 2–3 years, then a variable one. Attractive at the start, but when the fixed period ends no-one knows where rates will be. Calculate the total cost anyway.
§ 03
Early repayment and flexibility
- 01Clarify the early-repayment terms
In Turkey the early-repayment penalty is capped by law, but conditions vary between banks. If you plan to repay the loan early, this point is essential for comparison. A low penalty can make a bank more attractive in the final calculation.
- 02The right to make partial payments
Some banks allow extra unscheduled payments that reduce the principal. Bonuses and extra income sent here significantly cut the overpayment. Clarify this before signing the contract.
§ 04
Before submitting the application
- 01Approach at least three banks
Don't accept the first offer. Get written proposals from at least three banks and compare by YMO and total cost. Banks compete — don't hesitate to say so directly.
- 02Check your credit score in advance
Before applying, find out your credit score (Findeks skoru) and fix any errors. A low rating means a higher rate or a refusal. If necessary, improve it 3–6 months before applying by making small regular payments.
⚠ This material is for informational purposes only and does not replace legal advice. For major transactions always work with a qualified specialist in your country.