If you’re reading this article then it likely means you are thinking of buying a property in Spain. Congratulations!
When we first start thinking of buying a property abroad we tend to spend lots of time looking at the beautiful homes available on the internet, investigating what we can get for our money.
At this stage of your journey you may not stop to think about the fact that currency exchange rates can significantly affect what you are able to afford.
As i’m sure you know, currency exchange rates fluctuate all the time and the currency market can be volatile with exchange rates and associated fees differing depending on where you go. Therefore it is important to do your research before making any decisions or financial commitments. It could save you literally thousands of Euros!
For many, their first thought is to go through their usual bank. This may seem like the easiest option to begin with. However, generally banks will offer higher exchange rates than those available elsewhere. They are able to do this due to the high numbers of people who use their service without first comparing rates elsewhere. They take advantage of these individuals because they can. They are also likely to have various different fees for using them to do this.
Generally, the best starting point is to look at using a company which specialises in foreign currency exchange.
Here at Movehappy we work with the original Currency Exchange company in Spain, Currencies Direct. They were founded in 1996 and opened their first branch in Torrevieja in 1999. They now have branches all over the world and 16 branches in the area stretching from the Costa Blanca, to the Costa Calida, Costa Almeria and Costa Del Sol.
Such companies are often called FX providers. You could save as much as 5% by choosing to go down this route rather than through your UK bank. Lets say you have a £200,000 budget...that's a huge saving!! It could even mean the difference between being able to afford your dream home or not. This is not only due to such companies offering better exchange rates and services but the fact they do not have additional fees or transfer rates like banks do as mentioned above.
There are many other benefits of using a foreign exchange specialist. First of all is just that...it’s what they specialise in. It’s what their staff are trained in so you can guarantee being able to speak to someone who knows what they are talking about.
A specialist company such as Currencies Direct will offer you a wider range of services to match your specific and ever changing requirements. For large currency transfers such as purchasing a property they offer something called a forward contract. A forward contract enables you to fix the current rate for up to a year meaning you can protect yourself against market volatility. This has the potential to save you thousands and so is well worth looking into further.
When buying a property in Spain, the expenses continue even after completing your move. It is highly likely, exchanging currency is something you will need to do on a regular basis for different reasons. There are different types of transfer services to meet these different needs.
Spot contracts enable you to make immediate payments and regular transfers are ideal for regular payments such as mortgage payments and utilities, pension payments and other living costs. You can set up direct debits through your currency specialist using regular transfers to automate the transfer. You can even fix your exchange rate for up to a year meaning you’ll know exactly how much money will be being transferred each month. This is a huge benefit. There is nothing worse than differing rates meaning you are much worse off some months than others.
Alternatively if you wish or in addition, you can set a target rate for your transfers and wait to get the rate you are happy with. If you need to pay your monthly mortgage payment then this may not be ideal. But if for example you are transferring your pension payment and do not need it for anything specific, or you are transferring money from a savings account and so on, you can set it to transfer once the exchange rate reaches a certain number, taking advantage of positive market movement. You can also set a target rate and receive notifications when the market reaches it.
Another benefit of specialist companies such as Currencies Direct is that they offer 24/7 transfers over the phone, online or with their app and transfers generally go through within 24-48 hours. Banks can often take up to 5 working days. You can do most things quickly via an app, online or on the phone making it easy and convenient. We hope this article has answered any questions you may have had about how currency exchange works when purchasing a property in Spain and how shopping around can save you thousands. If you have any additional questions please do not hesitate to contact us here at Movehappy. Alternatively Currencies Direct have additional information on their website and would also be happy to talk your requirements through with you over the phone.