What is Mortgage (Housing Finance)?

what is mortgage (housing finance)?






    Housing is one of the basic tools of the ideal life. That's why people want to own a house for a secure future wherever they are in the world. Owning a home brings with it a strong sense of belonging. In addition to its economic comfort, the residence promises a grounded future. A mortgage is an ideal option for people who want to live within the confines of their own home. In our article, you can find the answers to questions such as what is a mortgage, how to get it, how to pay, which some people are very satisfied with and some people shake their necks. Mortgage is a term that means borrowing money by securing a property and buying that property with borrowed money. Mortgage is used in housing purchases. It can be a bit difficult to fully understand as it is an economic term. To give an example for easy understanding; You want to buy a house, but you do not have enough money to cover the sale price of the house. In this case, you can request money from banks under the name of credit. However, the amount of unsecured and unencumbered loans given by banks is not enough to buy a house. If you do not have any property to mortgage in order to borrow more, it is not possible to borrow large amounts from banks under normal conditions. However, a mortgage allows you to mortgage the house you plan to buy, so that you can get a large amount of loan from the bank by mortgaging the house you have not bought yet, but you plan to buy, and you can make the payment of this house to the seller in advance. You also pay back the loan you get from the bank in the long run. When the repayment is completed, the mortgage on the house is removed. In this way, the person who buys the house becomes the sole owner of the house.

    What Should Be Considered When Getting a Mortgage Loan?

    What Should Be Considered When Getting a Mortgage Loan?

    The house purchased with a mortgage loan belongs to the bank from which the loan is used until the payments are completed, even if it is the person's when the payments are finished. Therefore, if the loan taken to buy the house is not paid, the bank has the authority to sell the house in order to collect the loan debt. Therefore, it is necessary to pay attention to interest rates when taking a mortgage loan. It is important to prepare a payment plan at the rates that the person can afford. Banks generally have flexible payment plans for real estate subject to mortgage loans. Banks can prepare different payment plans for the customer. Because each customer's relationship with the bank is different. Mortgage loan is usually long term. Payments can be planned according to the longest maturity offered by the bank, or shorter payment terms can be planned according to the income level. Construction companies usually make agreements with banks and financial institutions for the projects they prepare. In this way, the house purchased from the project can provide more advantages in terms of mortgage. In addition, the appraisal process is completed faster for houses sold for the first time. Here are the details you need to know and pay attention to before using a mortgage loan:

    Set your budget:

    Determining how much you can pay before using the loan and adjusting this amount according to your monthly budget makes it easier for you to pay.

    Check your credit score:

    Credit score determines the chances of getting a loan and the interest rate. Knowing about your credit score helps you solve problems that need fixing.

    Compare and evaluate different loan options:

    The loan options of each bank and financial institution are different. By comparing the interest rates and payment periods in the loan options offered to you, you can choose the institution that offers the most appropriate interest and payment plan.

    Calculate filing costs:

    Banks and financial institutions that provide home loans have filing costs. It's helpful to know about documentation and filing costs.

    Read the loan agreement carefully:

    Contracts contain multiple documents. Since every article in the contract is binding on you, it is very important at this point to read every article and get answers to your questions, if any.

    Review the long-term results:

    It is important to review and evaluate the long-term results, especially for long-term loans. It is helpful to create a budget or develop alternatives to ensure that you can continue to pay off the loan.

    Is It Safe to Get a Mortgage Loan?

    One of the most frequently asked questions about mortgage is whether the mortgage loan is safe or not. Mortgage loan is a safe type of loan if it is agreed with the right institution and acted according to a detailed budget plan. However, it should not be forgotten that the house purchased with a mortgage loan belongs to the lending institution until the payments are completed, and if the payments are not made, the lender may sell the house. People who do not have a secure payment budget for the future and do not want to default can consider different options instead of mortgage loans.

    What are the Advantages of Using a Mortgage Loan?

    In addition to the advantages of buying a house by taking a mortgage loan, there are also some disadvantages. Advantages of mortgage loan are as follows:

    You don't have to wait for many years to own a house.

    Instead of waiting to save money to buy a house, you can have the house of your dreams in a short time.

    You can start using the house you bought immediately.

    In this way, you can decorate your house as you wish and start enjoying it, as there will be no moving situation.

    You can have the house you want to have without any problems.

    Because, with the appraisal report submitted for the house while using the loan, it has been documented that the house is technically and legally problem-free.

    The interest rates in mortgage loans are generally fixed.

    Even if the market interest rates increase, the interest rates specified in the contract you signed remain constant.

    The share of installment payments in total income decreases over time.

    Loan installments are fixed. However, the income level increases every year. Accordingly, the weight of installments in your budget decreases.

    There is a possibility of refinancing in the mortgage loan.

    In case of a decrease in market interest rates, you can restructure your loan by requesting refinancing and pay the rest of your debt with lower interest rates. There is always a refinancing option.

    You can pay your loan installments with rental income.

    Houses purchased with a mortgage loan can be rented. In this way, you can make payments with rental income by renting out the house you bought. Rental fees increase each year, but loan installments remain constant. In this case, you can both pay in installments and make a profit with the rental income.

    Insurance is done in the mortgage loan.

    In this way, your savings are secured.

    Making regular payments creates the habit of saving.

    Usually, careful spending is used to pay the installments comfortably. This becomes a lifelong habit after a while.

    What are the Conditions of Using a Mortgage Loan?

    There are certain conditions for using a mortgage loan. People who do not meet these conditions cannot use mortgage loans. The conditions for using a mortgage loan can be listed as follows:

    • Be at least 18 years old and at most 70 years old
    • To complete and present the documents requested by the bank
    • The person who will use the loan has a secure credit rating
    • The occupancy of the house or the completion of at least 80% of the project
    • To have a level of income to meet the monthly installment payments.
    • The appraisal report is positive

    Required Documents for Mortgage Loan

    Required Documents for Mortgage Loan

    To obtain a mortgage loan, some documents must be submitted to banks and financial institutions. In case of missing any of the requested documents, the loan request is not approved. For this reason, it is useful to directly contact the bank or institution to which the loan will be used. In the case of a loan, besides the basic documents, banks may request additional documents depending on the situation of the person requesting the loan. The basic documents required for a mortgage loan are:

    • Identity Card
    • Proof of residence or current invoice with address
    • Proof of income
      • Payroll for salaried employees
      • Interim financial data for sole proprietorships, tax certificate and year-end financial data
      • Current and year-end financial data of the company for legal company partners, the company's trade registry gazette / attendance sheet for the confirmation of the shareholding structure, and the company's tax plate
    • If there is additional income, documents related to these incomes
    • Deed
    • Deed of the real estate that generates rental income
    • Payment receipt with lease agreement
    • If there is interest or other income, the document showing the income
    • Documents of the house to be bought
    • Copies of the condominium title deed, building occupancy permit, as well as the floor easement deed and construction permit

    How is Mortgage Loan Calculated?

    The calculation of the mortgage loan varies according to the bank, payment plan, interest rate, number of terms and maturity period. To calculate a mortgage loan, you can use the loan calculation tools available on the Internet or contact the bank you work with.


    It is very important to make timely payments by adhering to the payment term in a mortgage loan. Today, banks remind you of delayed and unpaid installments and may allow additional time for you to pay. However, if the payments are constantly delayed, the lending bank begins to follow the loan. The lending bank has the authority to transfer the non-performing debt. All assets of the borrower may be at risk of being sold for the purpose of pursuing the loan. If the assets are sold, the person's credit score will deteriorate. In order not to have problems and not to lose the purchased house and other assets, it is necessary to make the payments of the mortgage loan carefully and regularly. It is useful to consider the following details when making loan installment payments:

    • Take care to deposit the loan installments in full and on time. You are liable to pay late payment interest for each day you delay payment. 
    • In order to ensure the continuity of coverage, insurance premium payments should not be delayed.

    Laws Related to Housing Finance

    Laws Related to Housing Finance

    The laws that place the mortgage loan on a legal basis and are related to housing finance are as follows:

    • The Law No. 5582 on the housing finance system was published in the Official Gazette on 06.03.2007.
    • With regard to real estate finance agreements, there are various regulations regarding housing finance in the Law on Consumer Protection No. 6502 and the Regulation on Housing Finance Agreements published in the Official Gazette dated 28.05.2015 and numbered 29369.

    Mortgage is a type of loan that makes it easy for people with a certain income and responsibility to pay. If you meet the necessary conditions, you can contact your bank or financial institutions to buy a house with a mortgage loan.

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