News: Protect your Costa Blanca property purchase from exchange rate movements

Protect your Costa Blanca property purchase from exchange rate movements
Written by Inmo Investments - 28 May 2018

The risk of negative exchange rate movements
on your Costa Blanca property purchase

Ill-timed currency fluctuations can inflate the cost of your new home

The latter part of Spring is the prime time to buy a property in Spain. And it´s hardly surprising, as with luck and a good conveyancer you can be in the property in time to enjoy the whole of the forthcoming summer.

Some of the best properties are held back for it, or pushed forward to the market to meet the anticipated rush of buyers.

Even better, North European currencies like the British Pound and Swedish Krona tend to strengthen against the Euro in the late springtime too, which certainly gives you the feel-good factor as you type your budget into the property search function.

But there is a potential risk in rushing over to look at Spanish property while your currency is strong, however.

Unless you lock in your currency at the rate that you make your offer at, and pay your deposit, what will you do if the your currency exchange rate subsequently falls before you pay the final balance?

It's a serious risk.

For example, on the UK´s May Day bank holiday last year you would have got an exchange rate of €1.18 per Pound Sterling. If you had agreed to buy a €200,000 property on that day (yes, we were working), you would have allowed for around £169,500 in Sterling funds.

But if you had completed in time for the school summer holiday in July, you would have got only €1.11 and your €200,000 investment now costs £180,000. Finding that extra £10,500 could be a big problem, and it's certainly quite a hit to your investment.

If you were unable to find the money you could have lost not just the property, but your deposit too, and nobody wants that to happen.

Smart currency exchange: foreign currency exchange for home buyers in Spain Smart currency exchange: foreign currency exchange for home buyers in Spain

Costa Blanca property: safeguarding your purchase price

You could gain too of course, but it's a big risk, and could be one gamble that you might not be prepared to take.

Our partners at Smart Currency Exchange analysed whether the Pound significantly lost value (by more than 1%), over the course of the month following making an offer. They found that in the two years up to April 2018, the Pound dropped in value 60% of the time.

There were 120 days over the past two years when, if you had made an offer on a €200,000 property, by the time you came to pay a month later you would have had to find at least an extra £6,000.

Most of our clients prefer to know that the price they budgeted for when they make the offer is the one they will finally pay. Speak to us about how we can lock in your exchange rate when you agree the purchase.

We have properties for sale in Pilar de La Horadada to suit your budget

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