This is a question that we have been asked quite frequently recently. It’s a busy time for buying in Spain and those who do have their sights set on having their own property here want to do it right.
It seems logical that setting up your own bank account should be the first step in the process of buying a house in Spain. However, it is not necessary to do so at this stage and, in fact, we advise against it.
Keep it local
To begin with, you probably don’t know at this stage exactly where you are going to buy your property. Until you do, it is unwise to choose a branch for your account. You will find it much more convenient in the future if you have a branch that is local to you.
Avoid the fees
You do not have to have a bank account in Spain in order to send your funds over to purchase the property. In fact, if you do, then you will be paying bank charges for the privilege at a time when there is no real need for you to have a bank account at all.
Banks in Spain charge a percentage on the funds that enter your account. They will then charge you again when you request a bank draft to pay for the property. The charges that you have to pay can extend into hundreds of euros – an unnecessary expense.
As an alternative, we suggest that clients send the payment for the property to the Ábaco client account. Our bank does not charge a fee and we organise the bank draft for completion, take it to the Notary and hand it over to the seller.
You also need to be careful about how and where you exchange your currency. Currency conversion is big business and there are stealthy ways in which the banks profit from it. Ábaco recommends Currencies Direct as a trustworthy and good value organisation. They give a much better rate than the high street banks in the UK.
When you know how many euros you need, Currencies Direct will tell you what that will be in pounds. You then transfer the pounds from your UK bank to their Barclays Bank account in London. They then transfer the agreed amount in euros from their Spanish bank to Ábaco’s bank. This removes the cost of international transfer fees, there is no commission and they guarantee the best rate possible.
Of course, with a very good pound to euro rate at present many people are keen to get the maximum benefit from this. You can use Currencies Direct and only transfer 10% of the final figure in advance. Whatever happens to the exchange rate after that they will honour the amount agreed when you transferred the 10%.
If for any reason you don’t find the property you want or your circumstances change then you can have your 10% back and they will just charge you the difference in the exchange rate at the time, if there is one. A much cheaper option that having to pay the costs for transfer of all your money from a bank account in Spain.
The time to open an account
Eventually, once you have bought your property you will have to open your own bank account in Spain. This is in order to pay the direct debits that will need to be established for your payment of utility bills. It is so much better, however, to set it up when you know exactly where you will be living. At this stage you should also make arrangements for internet banking which is a real bonus for non-residents.
There is no doubt that research and preparation is very important when it comes to buying your home in Spain. However, opening a bank account at an early stage is not necessary and can be financially detrimental.