One part of the buying process often overlooked by non-EU residents, is the importance of exchange rates and getting your Euros at the best rate possible.
For many people, buying in Spain involves the single largest financial transaction they will ever undertake, with the exception oftheir UK property dealings. And when you are buying in a different currency, there are crucial aspects that you need to understand.
Firstly, the impact of a volatile exchange rate on your budget cannot be overestimated. It’s not unusual for the Pound to vary against the Euro by a few percent over the course of a typical three month purchase cycle, and while that not sound like much, when you work out the difference to your sterling price equivalent, it works out to a big difference. In the first 5 months of 2023, a typical €200,000 property purchase would have cost anything between £173,400 and £179,500 – a difference of over £6,000.
In addition, high street banks do not often offer very competitive exchange rates on any given day. Using a broker such as A Placein the Sun Currency can save you up to 3.5% compared to using your bank – and that’s another £6,000 you can potentially shave off your purchase price.
The key is to do your research and planning early, and make sure you have a reputable, regulated currency broker to guide you through the process. As well as the differing exchange rates (which they can help you to understand and navigate), a specialist company dedicated to overseas property buyers and sellers will understand the purchase process and legal & banking systems inSpain, to make sure your completion goes smoothly – liaising with third parties and providing the required paperwork for your money transfers at the key times. Banks, in modern times, seldom offer anything like the same level of customer support – and there are other factors to consider too, such as excessive bank charges in Spain, which a currency specialist can help you avoid.
Finally, to help you manage exchange rate risk, brokers like A Place in the Sun Currency can also offer tools to allow you to fix your exchange rate in advance of your completion – leaving you in control of the rate you get, rather than leaving the markets in control of your transaction!
So don’t leave thinking about currency until the last minute – protect your budget, and your stress levels, by engaging with acurrency specialist early in your journey when buying overseas. It might just save you a tidy five-figure sum compared to using your bank and exchanging your money at the last possible moment.