At Total Buying Abroad we aim to make your Spanish property purchase as stress free as possible whilst helping to save you money in the process.
If you are thinking of buying a property in Spain, the property purchase price will probably be in Euros. If you have your savings in Sterling (or another other currency) you will therefore have to consider how you will deal with the currency exchange.
Your first thought may be to instruct your bank to transfer the money for you, however this can be an extremely expensive and inefficient way of dealing with the transfer.
It is strongly advised that anyone who is transferring large sums of money into another currency uses a recommended currency specialist to help exchange the money required rather than making the transfer through the bank.
Using a reputable currency specialist is one easiest ways to reduce the costs of buying a property in Spain and avoid the pitfalls of adverse currency fluctuations.
So how do currency firms save you so much money?
High Street banks make big profits by making currency exchanges at uncompetitive exchange rates and also by charging excessive amounts in commission or fees just to transfer the funds.
Currency specialists however are able to offer you far superior exchange rates when compared to the banks and most make only minimal charges (if any at all) for exchanging and transferring your money for you.
Let’s look at an example of a purchase of a three-bed villa in Spain costing 200,000 euros. On average, currency firms can save you 3-5 % of the amount of money transferred when compared to using a high street bank. In this case that’s a saving of up to 10,000 euros on the currency conversion alone!!
But there is more they can do…
Currency specialists can also save you a considerable about of money and hassle by helping you to organise your transfer in a way that will minimise the effect of adverse currency fluctuations on your savings.
Here are some examples of how:
Mr and Mrs Sedgefield had £100,000 to spend on an apartment near Alicante. They needed all the money straight away and planned to do a “Spot Trade” (eh? What the heck is that? Don’t panic – see our Jargon Buster.)
Lets say, the exchange rate offered by banks at the time is €1.30
They would get €130,000 for their £100,000.
At the same time, a recommended currency specialist was offering a rate of €1.34.
At this rate they would get €134,000.
In this example the Sedgefield’s saved €4,000 by using a currency specialists instead of their bank. Easy Peasy. But wait.. that’s not all…
Here is another example of how your currency specialist can really save you money!
Currency specialists can also provide advice and transfer strategies like fixing the exchange rate to help you avoid the impact of exchange rate fluctuations (this is called a
‘Forward’- again see our Jargon Buster for the science bit). See the example below.
The Maize family had their offer accepted for a 3-bed villa in Mallorca. The price agreed was €485,000.
They paid a 10% deposit of €48,500 for the property in November 2015 and got a rate of 1.44 euros to £1 so the deposit was £33.680.
They were then due to pay the remaining €436,500 on completion. At that rate this worked out at £303,125.
It then took 2 months to complete the purchase, in which time the exchange rate fell dramatically to 1.29 euros to £1. This meant that the Maize family would get less euros for their Sterling savings and the balance of €436,500 would now cost them £338,372 instead of £303,125.
That meant that on completion day the Maize family would have had to pay £35,247 more for the property than they thought when they agreed the purchase price in November 2015. Ouch!
Fortunately the Maize family had contacted a recommended currency specialist when they paid their deposit. The Currency specialist advised them that they could protect themselves against the risk of an adverse currency fluctuation by fixing the exchange rate (a process called a “Forward”) at the rate they had when they paid their deposit.
This meant that they were able to transfer the balance of the property purchase price on completion day at the same rate as when they made the deposit.
The Maize family therefore knew the exact amount that would be due on the date of completion with no surprises. By fixing the currency rate of 1.44 euros to £1 with a Forward Trade, the Currency Specialist helped the Maize family save £35,247!!
As demonstrated above, it pays to get organised! If you would like some further information about how currency specialists could save you money on your property purchase in Spain, contact Total Buying Abroad on 01244 478911 or at email@example.com. We will be happy to provide details of recommended currency specialists who have helped hundreds of Spanish property buyers navigate the currency markets and will be able to assist you.