Mortgages in Northern Cyprus

Northern Cyprus has a reputation as a cash buyer’s island where only those with a sizeable disposable lump sum can secure their dream Mediterranean home.

While this may once have been the case, nowadays thanks to the development and maturity of the property market in TRNC there are banks, estate agents and developers lining up to assist financially with property purchase on the island.

If you are looking to buy your dream home in North Cyprus and you’d like to learn more about the financial options you have, read on.

Mortgages in Northern Cyprus

Because of the unique political situation in Northern Cyprus it’s not currently possible to raise a foreign mortgage on a property physically located in the TRNC. Some Turkish banks operating in North Cyprus do however offer mortgages to their resident customers as they understand the political situation here, have worked with it for some 30 years and are a party to the ongoing developments that are underway to bring about a peaceful and absolute resolution to the Cyprus problem.

Turk Bankasi seems to offer the most flexible terms currently, they suggest you meet with your branch manager to discuss your personal requirements but publish the following as a guideline to what’s available: -

You can borrow up to 40% of the total price for a house purchase with an £80,000 mortgage ceiling.
You can borrow up to 50% of the total price for an apartment with a £50,000 mortgage ceiling.
You can borrow up to 2.5 times the combined household income.
Base lending rates start at 4%.
Repayment is over a maximum of 8 years.

Please note that in most cases, you need to be resident in North Cyprus to take advantage of such an offer.

Property Finance

Developers quickly caught on to the fact that lack of finance was restricting the property market potential in Northern Cyprus and some of the more astute and able among them now offer a range of finance options and opportunities for their customers.

Please contact the British Residents Property Finder Service to find out about any developers currently offering finance.

Equity Release

The Council of Mortgage Lenders in the UK recently revealed that the number of people remortgaging in Britain has risen sixfold over the last five years. For some, remortgaging allows them to take advantage of lower interest rates meaning they can save up to £1,000 a year for each 1 percentage point reduction in their interest rate.

For others remortgaging allows for the release of equity that has built-up in their property’s value, giving them a cash lump sum with which to work. Equity release could afford the individual the amount of money necessary to afford their dream second home abroad. While it may be cheaper to remortgage for equity release than to take out a personal loan, borrowing via your mortgage means that the debt is secured on your UK home and if you do not keep up your repayments your UK home may be repossessed.

Mortgage lenders in the UK are not currently in a position to lend money directly secured on your home in North Cyprus, but by releasing the equity that has built up through the value of your British property you can purchase your dream home in TRNC indirectly via a UK mortgage. Thus you benefit from the levels of consumer protection offered by the Financial Services Authority (formerly The Mortgage Code Compliance Board), you can take advantage of the favourable interest rates and flexible terms offered by major UK lenders at the moment, and your mortgage is not secured on your property in Northern Cyprus.

Instalment Payments

North Cyprus does not yet have an active resale market as the supply of new property is still outstripping demand. This means that those seeking a home in Northern Cyprus generally choose to buy off plan and have complete control over the design and finish of their dream property. Buying off plan offers the purchaser many advantages, not least of which are two significant financial benefits; firstly, if you decide to buy today you secure your property at today’s prices yet don’t move into it until it’s completed in 1 - 2 years, at which point its market value may well have significantly increased. This gives you an immediate return on your investment.

The second financial benefit that buying off plan affords you is the ability to stagger your payments over the duration of the build process. You therefore effectively benefit from an interest free finance period of between 1 and 2 years.