Spanish property is priced in Euros and many international buyers have funds in another currency like Pounds Sterling. This means they have to buy Euros before they can buy their Spanish property. Buying Euros can cost you more than it need to if you are not careful about who you buy them from.
Assuming that you are starting off with Pounds Sterling (though the same applies to all other currencies like US Dollars or Swiss Francs), then the timing of your Euro purchase and who you buy them from can have a significant impact on the overall price you pay in Pounds Sterling.
Experience shows that many people both overpay for the Euros they need to buy their property, and take unnecessary risks with exchange rates once they have taken on a Euro exposure (obligation to pay Euros in the future).
Once you have bought a property in Spain, you may also need to make regular transfers to and from Spain, which involve foreign currency exchange. Even if the amounts are relatively small compared to the sums involved when buying and selling, they can still add up to a big number over time. Many people regularly overpay for foreign currency when making small transfers to and from Spain.
In the following sections I explain how foreign currency issues can have a big impact on the price you pay for buying, owning, and selling property in Spain.
For useful currency conversion tools, see the column on the right.
Foreign currency exchange (Forex) guide
- What are foreign currency exchange rates? We will start with a short explanation of exchange rates are and why they are constantly changing. If you are familiar with exchange rates skip onto the next section.
- What impact can exchange rates have on the price of my Spanish property? When you buy a property in Spain you take on a Euro exposure - an obligation to pay someone a certain amount of Euros at a specified date in the future.
- How can I manage my foreign exchange rate risk? When you sign a contract to buy a property in Spain and take on a Euro liability you become contractually bound to deliver a certain amount of Euros at a specified date (or dates) in the future. If your funds are in another currency like Sterling it then becomes important to manage your exchange rate risk.
- Save money on foreign currency exchange Specialist currency dealers and high street banks are the main suppliers of foreign currencies to British buyers. Both dealers and banks buy their Euros from the international currency market, add on their commission, and then sell the Euros on to you.
Save a fortune on foreign currency
Buy and sell currencies at the best rate with low commissions and transfer costs. Use a specialist broker and save a fortune. Having looked at all the companies out there, TorFX is our favourite foreign currency broker.
TorFX is a provider of foreign exchange services, offering competitive currency exchange rates for international money transfers and an unrivalled personal service to private individuals and companies with a foreign currency exchange requirement.