Buying Property in a Foreign Currency: Hedging the Exchange Rate

Buying property in a foreign currency means, for most buyers from Switzerland, the UK or the US, two signatures weeks or months apart: first the reservation contract, then the escritura at the notary. In that window, the exchange rate can move and quickly cost you a four or even five figure sum in euros. If you earn in Swiss francs, pounds or dollars, you should actively hedge the rate rather than leave it to chance.

What exchange rate risk means when buying property

Exchange rate risk on a property purchase is the danger that the conversion rate between your own currency and the euro moves against you between signing the contract and actually paying. On a purchase price of several hundred thousand euros, a swing of just one or two percent is enough to make a difference of several thousand euros.

This mainly affects buyers who earn in Swiss francs, pounds or dollars and only bring their capital to Spain for the purchase. If you already hold a euro account with enough balance, this is not an issue for you.

Home bank, currency specialist or Wise: three routes for amounts from EUR 100,000

For smaller everyday transfers, an online provider is usually enough. For a purchase sum from EUR 100,000 upward, it is worth taking a closer look at three options:

• Your home bank is convenient because you use the account you already have. But the markup on the mid-market rate there is often 1.5 to 3 percent, and the bank rarely discloses that markup up front.
• A currency specialist offers personal support and a forward contract that lets you lock in a rate weeks before the notary appointment. Limit orders are also available, executed automatically once a target rate is reached.
• Wise settles online at the real mid-market rate and shows the fee clearly before you transfer. For very large single amounts over a million euros, it is worth calling their support first to clarify limits and processing time.

You'll find more on the basics of transferring money to Spain in the guide to transferring money to Spain. That guide focuses more on ongoing transfers than on a one-off purchase sum of this size, though.

Worked example: a EUR 900,000 purchase price

A Swiss buyer reserves a property for EUR 900,000 and has to transfer the equivalent in Swiss francs. Depending on the provider, the pure exchange markup differs like this:

The exact difference depends on the day's rate and the product you choose, but it shows why a comparison is worth doing at this scale. Just the gap between a home bank and an online provider can cover the entire notary fee here.

The payment path to the notary appointment

The process usually follows three steps. First you transfer the reservation fee, typically 1 to 2 percent of the purchase price, directly to the seller or into the lawyer's client account (cuenta de clientes). A deposit at the preliminary contract stage may follow. The balance is paid on the day of the notary appointment, usually by bank draft (cheque bancario) from a Spanish bank or by direct transfer to the seller, depending on what the purchase contract specifies.

If the money runs through the lawyer, they check as trustee that every condition is met before releasing the sum at the notary appointment. We cover how the legal review during a purchase works in detail in the guide to finding a lawyer for your property purchase.

What the Spanish bank wants to see for anti-money-laundering checks

Every bank in Spain is legally required to document the origin of larger sums of money. Since the reform under Law 11/2021 against tax fraud, a cash payment over EUR 1,000 between a private individual and a business has also been banned in Spain, which means the entire purchase price has to move as a transfer or a bank draft anyway. For the check, the bank will generally ask for:

1. a valid ID or passport along with your NIE number
2. proof of where the money came from, for example bank statements, an employment contract or the sale contract for a previous property
3. the signed purchase or reservation contract showing the payment amount
4. for transfers from abroad, the name of the sending bank and often a short form stating the purpose of the transfer

If these documents are missing, the bank delays crediting the funds, which can become a real problem right before a fixed notary appointment. We have worked through the extra costs that come on top of the purchase price itself separately in the guide to property purchase costs.

Do I need to have the full amount in Spain before the notary appointment? Yes, at least for the balance due. The bank draft needs lead time, and crediting a transfer including the anti-money-laundering check takes anywhere from one to several working days depending on the bank. Plan for the money to be in place at least a week before the appointment.

These official bodies provide information on exchange rates, the notary process and anti-money-laundering checks:

Bottom line

Between reservation and the notary appointment, there is enough time for an unfavorable exchange rate move on a property purchase from abroad to turn into several thousand euros in extra cost. Before your first larger transfer, compare your home bank against a currency specialist and an online provider like Wise, and for amounts from EUR 100,000 upward, hedge the rate with a forward contract or a limit order wherever possible. Keep your proof of the money's origin ready so the Spanish bank can clear the transfer without delay, and build in a few working days of lead time for the bank draft at the notary appointment. Comparing early instead of waiting until transfer day often saves more, on a six-figure purchase price, than the entire notary bill.