Buying Your First Home in the UK: A Guide for Turkish Families

Buying a home in the UK as a Turkish family is an increasingly popular choice, especially in areas that have strong, established Turkish and Turkish-Cypriot communities, such as London. There are no legal restrictions when it comes to buying a UK home from abroad; there are just a few extra hurdles to overcome.

These include needing a larger deposit, providing more documentation, paying a stamp duty surcharge and understanding the varying eligibility criteria, which depend on your residency status. Our Turkish-speaking mortgage brokers are here to help you navigate this and secure a mortgage to buy your first family home in the UK.

Key financial considerations

As you might expect, there are more stringent financial requirements when buying your first UK home as a Turkish family.

Deposit requirements for Turkish buyers in the UK

The deposit requirement varies, depending on the lender and your residency status. Generally, deposits required for foreign nationals are higher than for UK residents, who can usually secure a mortgage with a deposit of 5% or 10% of the property’s value.

Non-residents buying from abroad typically have to provide larger deposits of 25% to 40%. However, as a foreign national living in the UK, you can expect to pay a lower deposit of 15%. Some lenders are even willing to accept 10% when you have a settled status (indefinite leave to remain).

You need to provide evidence of the source of your deposit funds to meet compliance requirements for anti-money laundering regulations. Therefore, prepare the relevant documentation and bank statements to confirm this. Our Turkish-speaking mortgage brokers can guide you on what to provide if you’re not sure.

Proof of income for Turkish borrowers

As with any mortgage application, your income needs to be verified and foreign buyers are often faced with stricter income checks.

Employed

Typically, if you’re employed, lenders require 3 to 6 months of payslips, your bank statements and a P60. It’s usually necessary to have had consistent UK employment for at least 6 to 12 months. Some lenders also stipulate a minimum income requirement.

Self-employed

If you’re a self-employed Turkish buyer, lenders typically need you to provide 2 to 3 years of certified accounts and SA302 forms. Don’t worry if you haven’t been self-employed for that long because some lenders accept 1 year of accounts. If this is the case, your mortgage broker can approach the right lenders on your behalf.

Being self-employed brings additional challenges, such as having a fluctuating income or an income structure that can potentially limit your borrowing power. This is where your broker comes in, ensuring that your accounts are presented in the best light and approaching lenders who offer more flexibility for self-employed borrowers.

Foreign income

If using a foreign income to buy your first home in the UK, be aware that the current exchange rate won’t be used to determine the funds available for you to use. Instead, lenders use an income ‘haircut’, reducing the amount from anywhere between 10% and 25%. This allows for fluctuations in the exchange rate and is a regulatory safeguard. As such, your money won’t go as far as you originally planned. Your broker can guide you on ways to mitigate this currency risk, such as using forward contracts.

Stamp duty for Turkish buyers

When you buy a residential property in England or Northern Ireland, a one-off tax is payable, called Stamp Duty Land Tax (SDLT). This is based on the property price and has different thresholds that apply when calculating the stamp duty payable. Stamp duty is payable within 14 days of the completion date of your purchase and your solicitor can usually pay this on your behalf.

As a first-time buyer, you benefit from relief on the amount of stamp duty you have to pay. The first £300,000 of the property’s value is exempt under the standard stamp duty thresholds. You also benefit from additional relief up to a value of £500,000, so that the following rates apply:

• £0–£300,000: 0%
• £300,001–£500,000: 5%

If you’re a non-UK resident, a 2% stamp duty surcharge is also applied, whether you’re buying a freehold or a leasehold property. You may be able to claim a refund for this 2% surcharge if you become a UK resident within 2 years of buying your home.

For example, as a first-time buyer purchasing a property valued at £380,000, the standard stamp duty payable is: 

• The first £300,000 (exempt): £0
• The next £80,000 (5%): £4,000

Then, the non-UK resident surcharge (2% of £380,000): £7,600

The total payable is then £4,000 + £7,600 = £11,600

In Scotland and Wales, different taxes charged at different rates are applied to property purchases. In Scotland, Land and Buildings Transaction Tax (LBTT) is payable, while Land Transaction Tax (LTT) is payable in Wales.

Additional costs for Turkish first-time buyers in the UK

As well as needing to budget for your deposit, the potential stamp duty charge and differences in the exchange rate if using funds from abroad, there are other costs to consider as a first-time property buyer from Turkey. These include:

• Valuation fee: A valuation has to be carried out on the property to ascertain its correct value and confirm that it’s suitable as security for the mortgage.
• Survey fee: A survey confirms the condition of the property and there are different types of surveys to choose from, depending on how in depth you wish the report to be.
• Booking fee: Some lenders charge a booking fee, which is usually non-refundable. This is paid on application to reserve a specific rate.
• Arrangement fee: An arrangement fee is charged to cover the setting up and processing of the mortgage. It’s either charged as a flat rate or as a percentage of the mortgage loan. It can be paid upfront upon completion of the mortgage or, if you prefer, it can be added to the mortgage. Whilst this latter option reduces your initial upfront costs, interest will be charged on the arrangement fee throughout the mortgage term, making it more expensive in the long run.
• Legal fees: These include your solicitor’s/conveyancer’s costs for the legal aspect of the property transaction, such as conducting the searches, registering the property title, drawing up the contracts, handling the mortgage funds and more.
• Buildings insurance: Lenders usually insist that buildings insurance is in place on exchange of contracts. This is because the property is being used as security for the loan and needs to be financially protected against unexpected incidents.
• Moving costs: Don’t forget to include the moving costs when buying your first home in the UK. There are also initial expenses to consider when first moving in, such as changing the locks, paying for professional cleaning if necessary and dealing with immediate home maintenance that’s needed.

Legal and visa requirements for Turkish first-time buyers

You can legally buy property in the UK as a foreign national or a non-resident, regardless of your visa status. However, this doesn’t give you the right to residency or citizenship and you need to comply with the UK immigration rules. Non-residents, for example, are generally restricted to buy-to-let purchases. A visa isn’t necessary to buy this type of property because an investor won’t be living in it themselves.

When buying your first UK home as a Turkish family, however, you do need a valid visa as you’re intending to live in the property you’re buying. Lenders also prefer you to have a minimum residency term in the UK, such as 1 to 2 years. An example of an acceptable residency-based visa is a Skilled Worker visa.

Our Turkish-speaking mortgage brokers can ensure you have the right visa to buy a UK property that you want to live in. As lenders vary with the visa statuses they accept, our brokers can identify those who are most suited to handling your circumstances and present your case in the most effective way to gain approval.

Once you’ve been a UK resident for the required period, you’ll have indefinite leave to remain (ILR), which is a settled status. At this point, you can then apply for citizenship.

Appoint a solicitor for your UK property transaction

When buying your first home in the UK, you need to appoint a solicitor. Their role is to carry out the legal work for the property transaction. This can include registering the property title, conducting the searches, checking for planning issues, drawing up the contracts, transferring the funds upon completion and handling your stamp duty payment if applicable.

Your solicitor also has to check that your documentation complies with UK regulations. This includes verifying your identity and address as well as confirming the source of your funds. The latter is a legal requirement to comply with strict anti-money laundering regulations. Our mortgage brokers can advise you on the paperwork needed so that you can prepare early and ensure a smoother process.

If you don’t already have a UK-based solicitor, we can recommend one for you. We work closely with trusted solicitors who are well-versed in handling property transactions for international buyers.

Other challenges faced by Turkish buyers in the UK

There are other challenges you may be faced with when buying your first home in the UK. These can include issues with your credit record, a minimum income requirement by lenders, the need to provide proof of funds and potentially paying higher interest rates.

Credit history issues

A common issue experienced by Turkish first-time buyers when trying to secure a mortgage is a lack of UK credit history. Lenders check your credit profile to understand how well you manage your finances. If you’re new to the UK, however, you’ll have little or no credit history. Or you may have lived in the UK for a while but moved around. In this case, you’ll have address inconsistencies. If you receive an overseas income, this can also affect your credit rating.

Whilst having a good credit history is preferred, it’s not always essential. Some lenders accept overseas credit reports and others focus more on your income and overall financial position. Specialist lenders, for example, take a more flexible approach and use manual underwriting, giving you a better chance of being approved if you have a lack of credit history.

There are some ways to build your financial profile in the UK. These include opening a UK bank account, getting a UK credit card and setting up a mobile phone contract. Our mortgage brokers can guide you on ways to do this so that you have a stronger credit profile in the future.

Higher interest rates

The interest rate you pay on the mortgage depends on various factors, with the level of risk you pose to the lender being a main consideration. One factor is the loan-to-value (LTV) ratio, which is how much you’re borrowing compared with the purchase price. The higher the LTV percentage, the more of a risk you pose and the higher your interest rate is likely to be. A limited UK credit history also increases a lender’s risk and they may decide to mitigate this by charging a higher interest rate.

Many UK lenders are experienced in dealing with international clients so being charged a higher interest rate isn’t set in stone. As well as that, we’re an independent mortgage broker, which means that we’re not tied to specific lenders. This means that we can find lenders who are most suited to handling your case and are more likely to offer competitive rates.

Minimum income requirement

Some lenders set a minimum income requirement, although it’s possible that this may only be required if other conditions can’t be met. For example, if any of the mortgage applicants in your family don’t have a pre-settled or settled status, the lender may insist that at least one applicant meets their minimum income requirement. This may come with other stipulations, too, such as a maximum LTV.

Proof of funds

As mentioned earlier, you have to provide proof of the source of your funds. This is to comply with strict anti-money laundering regulations in the UK. Your lender and UK solicitor will need to see detailed documentation to verify where your funds have come from. The documentation to be provided will depend on the source. For example, if you inherited the funds, you’ll need to provide the death certificate, the official grant of probate and a letter from the executor that confirms the transfer of funds to you.

Our mortgage brokers can check the lender’s specific paperwork requirements for the particular source of funds you’re using.

Choosing the right property for your first home in the UK

It’s important to choose the right property as your first home in the UK. This isn’t just for financial reasons but so that you feel comfortable and settled in your new home and neighbourhood.

Location

London is a premium choice for Turkish buyers, not least because it offers high capital appreciation. It has strong international demand and thriving Turkish communities. Of course, properties in London tend to come with a premium price tag, too. Other high-growth areas to consider that have well-established Turkish communities are commuter towns in the South East, especially in Kent, with close links to London. These areas tend to have more competitive prices for properties than in London.

You also need to be near facilities that meet your day-to-day needs, such as:

• Transport links
• Schools or universities
• Local amenities

Property type

Consider the age of the property you want to buy. Do you prefer an older property or a newly built one? Think about the pros and cons of each type.

Older properties

These tend to be larger in size and have more character compared with new builds. They have spacious rooms, high ceilings, original features and usually have larger driveways and gardens. They tend to be in established neighbourhoods and offer lots of potential to add to their value, such as by adding an extension or carrying out renovations.

On the downside, older properties are more expensive to run, with lower energy efficiency ratings than new builds, which considerably increases heating costs. There are higher maintenance costs to consider, with wear and tear being more noticeable on the older elements of a property. The interior may need updating and there may be an immediate investment needed, such as to replace old wiring.

Existing homes also come with property chains, which can lead to stress, delays and, in some cases, cause the purchase to fall through.

Newly built properties

New builds enable you to move into a brand new property that’s like a blank canvas, ready for you to put your stamp on. There will be very few maintenance issues to deal with, possibly just a few snagging issues when you move in. New builds come with structural warranties, giving you peace of mind that you won’t have to pay for expensive issues.

There’s no property chain so you don’t need to worry about the possibility of the chain collapsing and you losing the home you want to buy. New builds are also extremely energy efficient, ensuring that your energy bills are much lower than you’d pay for an older property.

On the flip side, newly built properties are smaller than older ones. They tend to have a smaller square footage overall, with smaller rooms and outside spaces. They lack the character of older properties and don’t provide the same level of soundproofing as period homes.

Notably, newly built properties come with a ‘new build premium’. They are sold at a higher price for the benefit of having a brand new home. However, the value quickly reduces within the first few years of the property being occupied. This means that if you’re planning on selling your home within a few years of buying it, you’re likely to suffer a loss in price.

Freehold or leasehold

As a Turkish buyer, you can buy freehold and leasehold properties in the UK. But it’s important to know the differences between them.

• Freehold: In the UK, houses tend to be freehold, while flats are usually leasehold. Freehold means that you own the property and the land it’s on outright. As such, you’re responsible for the ongoing maintenance and costs. You don’t pay any service charges or ground rent.
• Leasehold: Leasehold means that you own the property for a set number of years, as detailed in the lease. The communal areas are managed by a landlord (the freeholder). You pay ground rent to the landlord as well as service charges as your contribution towards the maintenance costs.

Be aware of short leases that have less than 80 years left. It’s hard to be approved for a mortgage with a short lease and they are very expensive to extend, making it hard to sell the property in the future.

Size of the property

You want to be comfortable in your new home while keeping within your budget. Think about how many bedrooms and bathrooms you need for your family. Do you need space for a home office or storage?

Also, think about the accessibility of the rooms. For example, if a member of your family has restricted mobility, a downstairs bedroom and bathroom will be beneficial for them.

What to check

Conduct an in-person viewing

Be sure to view the property in person at least once. Whilst online portals often enable you to conduct virtual tours with 360-degree walkthroughs, this doesn’t give you the full picture that an in-person viewing would. Online viewings are a good way to narrow down your choices but once you’ve done this, an in-person viewing gives you an accurate feel for the property.

It gives you an accurate view of the layout and highlights any issues that you may not have noticed online, such as cracks or signs of damp. You can see how the natural light falls in the property, notice any unusual smells and listen for noises, such as street noise or neighbours. You can also test things while you’re there, such as turning on taps to check the water pressure or opening and closing windows.

Look at the Energy Performance Certificate

When you buy a UK home, it must have an Energy Performance Certificate (EPC). This details the property’s energy efficiency, using a rating system from A to G, with A being the most energy efficient and G being the least. An EPC also includes approximate energy costs for the hot water, heating and lighting as well as energy performance-related details for the walls, windows and roof. It gives recommendations on how to make the property more energy efficient, with approximate costs and the potential savings on fuel bills once these changes have been made.

Get a survey done

A survey is important to assess the condition of the property. It protects your interests because a surveyor will check for hidden structural defects, such as subsidence, faulty wiring or damp. The property’s boundaries will be clearly mapped, preventing costly legal boundary disputes. The survey will highlight any access rights, including easements.

Once you are aware of potential issues, you can budget for any necessary work that may have to be carried out in the future. It also puts you in a good position to negotiate on the price of the property with the seller or ask them to deal with the issues before the transaction completes.

Specialist assistance from a Turkish-speaking mortgage broker

Buying your first home is exciting but doing this in a language that’s not your native one can be daunting. That’s why we have Turkish-speaking mortgage brokers to help you navigate the UK property market with ease. With clear explanations in your own language, this removes the worry of misunderstandings and ensures that you fully understand the mortgage process from start to finish.

Are you ready to secure your dream home in the UK? Give us a call on 01322 907 000 to benefit from a tailored service. Our qualified brokers are highly experienced in arranging mortgages for foreign nationals. They have access to lenders across the board, ensuring the right ones are approached to meet your needs. If you’re not sure that a mortgage is your preferred way to buy your first UK home, our brokers can offer impartial advice on the alternatives available, such as bridging loans.