Paying in pounds: exchange rates and moving the money

When the euros are due

On a resale purchase the money leaves in three steps. A small reservation payment takes the property off the market while your lawyer checks it. The private purchase contract (contrato de arras) follows with a deposit, customarily 10 % of the price. The balance is paid at the notary on completion day, together with the purchase taxes and fees — budget 10–12 % on top of the price for a resale in Andalucía, as our guide to the taxes explains.

Between the deposit and completion there are usually a few weeks on a resale, and months or years of staged payments on a home bought off-plan. For all of that time, the pound can move against the euro.

Where the cost hides: the rate, not the fee

A transfer has two prices. The fee is the one printed on the screen. The other is in the exchange rate: the rate you are offered is the market rate minus the provider's margin. To see it, compare the rate you are quoted with the mid-market rate at the same moment. The gap is what the transfer really costs — and it adds up quickly: every percentage point of margin is £1,000 on each £100,000 you convert.

Margins differ widely between providers, so get two or three quotes for the same amount on the same day, and compare the euros that will arrive rather than the fee.

Fixing the rate before completion

• A forward contractfixes today's rate for a payment on a set future date — completion day, or each stage of an off-plan purchase. You usually leave a deposit with the provider. If sterling falls before completion you are protected; if it rises, you do not gain.
• A limit order converts automatically if the rate reaches a level you choose, and does nothing if it does not.
• Converting as you go — the spot rate on the day — is simplest, and leaves the whole amount open to the market until it is paid.

Choosing who moves the money

Use a bank or a currency provider authorised by the Financial Conduct Authority: you can check any firm on the FCA's Financial Services Register before you send it a penny. Send the money from an account in your own name. Money held by a currency provider is safeguarded, which is not the same as the Financial Services Compensation Scheme protection on a bank deposit — one more reason to pick an established firm and not to leave funds with it longer than needed.

One rule above all the others: confirm bank details with your lawyer by phone, on a number you already have, before every payment. A change of account details that arrives by email is the classic way property buyers lose money — a genuine Spanish lawyer will never mind you checking.

What Spain asks about the money

At the notary, the deed records how the price was paid — which transfers, from which accounts. Spanish banks and notaries also check where the money comes from, as UK banks do: keep the paper trail ready, such as the completion statement from the sale of your UK home or the statements of the savings you are using. Cash is not how a home is paid for in Spain.

You will also want a Spanish bank account once you own the home: community fees, the IBI property tax and the utilities are paid by direct debit. Opening one needs your passport and your NIE number, and your lawyer can arrange it during the purchase.

A Spanish mortgage instead?

Spanish banks lend to non-residents, but less: typically up to 60–70 % of the lower of the price and the valuation, where a resident can usually borrow up to 80 %. Borrowing in euros against a home priced in euros removes the exchange risk on the part you borrow — the monthly payments are then in euros, from income in pounds.

The short version

Know when each euro is due, compare quotes on the euros that arrive, consider fixing the rate for completion day, use an FCA-authorised provider, and check bank details by phone. Do that and the exchange becomes a line in your budget rather than a surprise on the day.

More for buyers coming from the UK

• Buying in Spain from the UK after Brexit
• The 90/180 rule: how long you can stay in your Spanish home
• Owning in Spain while living in the UK: tax on both sides
• Getting to the Costa del Sol from the UK