Navigating Currency Exchange When Buying Property in Javea, Spain
Embarking on the journey of purchasing property in Spain, specifically the picturesque area of Javea, is undoubtedly thrilling. However, navigating the intricacies of currency exchange can be a complex process, especially for first-time international buyers. By grasping how currency exchange dynamics can impact your real estate transaction, you stand to save thousands of Euros and sidestep any unforeseen issues.
Recently, we had an insightful discussion with Kevin Wright, a currency exchange expert from Moneycorp, a reputable UK-based company with global operations and standing as the oldest and largest of its kind. From our conversation, we derived key points that potential international property buyers should consider.
Knowing Your Budget and Shielding It
Establishing your budget is the initial step when buying property abroad. Yet, bear in mind that your budget could be significantly affected if you're buying with a non-euro currency, due to potential exchange rate fluctuations.
For instance, if you plan to buy with £200,000, that amount could equate to around €230,000 with today's exchange rate. If the rate swings in your favor, your budget could increase up to €240,000 to €250,000. Conversely, an unfavorable rate could shrink your Euro budget.
This risk can be mitigated by utilizing a 'forward contract.' This service, typically unavailable through banks but offered by currency exchange companies like Moneycorp, allows you to secure a current rate with a deposit. It's a viable strategy to protect your budget from potential detrimental exchange rate fluctuations.
The Impact of Currency Volatility
The volatility of currency, especially Sterling to Euro, has escalated since Brexit in 2016. Before Brexit, the exchange rate was relatively predictable. But now, due to various factors, it's been fluctuating more erratically. This underlines the importance of monitoring these shifts and understanding their potential impact on your real estate investment in Spain.
The Implications of Brexit and Receiving Charges
UK clients need to be aware of the implications of Brexit on the currency exchange process. With the UK now classified as a third country, Spanish banks have started imposing receiving charges on transfers from the UK. These additional costs should be factored into your property purchase.
However, there are ways around this. If you're using a currency company that has a client account in Spain, funds are transferred from within the EU, thereby sidestepping these receiving charges.
Initiating the Currency Exchange Process
Once you've agreed on a property price with the seller, the next step is to start the currency exchange process. Many clients now recognize that banks aren't necessarily the best choice for significant currency transfers. Banks often lack the guidance, information, and service range that specialized currency exchange companies provide.
When selecting a currency exchange service, it's critical to do your research. Make sure the organization is well-trusted, robust, holds the necessary licenses, and is fully regulated within each region they operate. This is paramount to ensuring the safe handling of your funds.
Conclusion
While dealing with currency exchange can seem challenging, the right information and support can turn it into a money-saving factor in your real estate purchase in Spain. The insights from Kevin Wright should prove beneficial to those considering purchasing a home in Javea, Spain, and grappling with the complexities of currency exchange. Remember, understanding and protecting your budget, being aware of current volatility, considering the post-Brexit implications, and choosing the right currency exchange service are all crucial steps toward owning your dream home in Spain. And if you're thinking about taking the leap now, don't hesitate to get in touch with us or have a look at our properties for sale in Javea.