In the anxiety to sell your Spanish home you can neglect to consider how you will transfer the money back to your home country once the sale is complete. It’s understandable that other priorities engage you. Will the sale go through? Has all the correct paper work been completed? Are there any loose ends you now need to tidy?
However, failing to make the right decision about transferring money from Spain can cost you dearly. It comes as quite a surprise to many of our clients just how much the cost of international transfer can be. There are two ways in which it’s usually done:
- by taking the banker’s draft received at the Notary to a Spanish bank and paying it into a Spanish bank account ready to transfer
- by taking the banker’s draft back to the home country and placing it directly into a bank account there
Both can be costly transactions. For example, if you place a banker’s draft in your own Spanish bank account you might be charged around 0.6% on the amount you deposit. The bank will then decide when to make the exchange. The priority for you is a favourable exchange rate. The bank will have priorities of its own. When the money is finally transferred you can expect another charge from the receiving bank. Again, this can be between 0.6 and 1%.
The other option preferred by some, is to take the cheque back to their home country. However, this process is a long one and, again, potentially expensive. Once you have placed the cheque in your account it will be sent back to Madrid where it could be held for up to 5 or 6 weeks. You will then be charged between 150€ and 200€ for every 1,000€ you have deposited. When it is finally exchanged, you will have no control over the exchange rate which will be decided by the bank.
Financially, neither alternative is particularly attractive. A reason why the transfer of money between countries is a growing business. There are a number of companies who provide alternative means of making international transfers. These companies, often arrange special terms and conditions that allow you to have some control over the rate of exchange and generally aim to keep banking costs to a minimum.
The main message is, if you are considering transferring a large sum of money don’t let deciding how to do this be the bottom of your list of priorities.