Last updated: 10th November, 2020
Don’t get stung on foreign property deposits when buying property abroad
By Victoria Yasinetskaya, Chief Marketing Officer at PagoFX
There’s little doubt the ongoing Covid-19 pandemic has totally changed the way we think about where we live and where we work. As decades of expected change to remote working has happened in just a few months, the new normal of working from home for a majority of the time appears to be here to stay.
This presents workers – at least those with the ability to work from anywhere – with the opportunity to completely change where they work without having to leave their job security behind. It’s been well reported that those in the UK are leaving cities and moving to the countryside for more space and a better quality of life. For those more adventurous or with ties to other countries, there is also the option to work either temporarily or permanently from outside the UK.
No wonder, then, that there is an increasing interest in buying property abroad. Even when travel restrictions are in place, there is a strong draw to working in the sun in the south of France and abandoning your small studio flat in central London. For many workers, so long as they have an internet connection and a similar time zone, any destination is on the table.
However, first-time buyers of property abroad need to make sure they do their research. In the middle of a pandemic, the last thing people need is to lose money on hidden fees or unexpected costs. There are plenty of places where costs can increase when buying a home abroad.
Working with local agents and suppliers (if building work is required) means many will need to transfer money between these countries in local currency. In this case, there needs to be an awareness around the tools that can be used to transfer money between currencies. Too many people assume that transferring money between accounts internationally is the same as doing so domestically. It is not the same, although with the right tools, it can be just as quick and easy.
Beware of unexpected fees
One big cost that buyers often overlook when buying a property overseas is the deposit. This is a large lump sum and transferring it can cause plenty of anxiety when sending money abroad. If sent using a standard bank transfer, some banks can charge substantial fees proportional to the size of the transfer. This means it can add up to thousands for the deposit.
Meanwhile, when purchasing a property, speed can also be critical. Standard bank transfers can be slow and take days to appear in the bank account of the recipient. In some cases, this could mean the difference between a property acquired and a property deal lost.
Fortunately, there are solutions available. Foreign exchange transfer services such as international money transfer apps are specifically designed to allow for money to be sent abroad quickly, safely, and at a much lower cost. In most cases doing so takes just minutes, so deposits or smaller payments related to buying that dream house abroad can be sent quickly and efficiently.
Importantly, never underestimate the benefits of working with trusted local representatives when purchasing a property. While paying them in their local currency adds a level of complication, the advice you get will ensure you don’t end up with a property that’s falling apart or with major liabilities.
Working from abroad will become increasingly common, and many offices will not be back to full capacity for some time. While the idea of a desk by the beach in the sunshine sounds idyllic, it doesn’t come without challenges to overcome. Seek the right advice and use the right tools though, and getting that property abroad could be closer than you might think.
If you’re looking for a safe and affordable way to transfer money overseas for property costs, PagoFX by Santander lets you send money quickly and easily and with low, transparent fees.
Available now in the UK and regulated by the Financial Conduct Authority (FCA), PagoFX combines the speed and ease-of-use of a fintech (financial technology company) with the security of one of the world’s most trusted banks.
You can make payments with a debit card from any UK bank, and you’ll see upfront exactly what your transfer will cost and how much your recipient will receive. What’s more, PagoFX uses real-time, mid-market exchange rates, like the current exchange rates you’ll find in search engines. This means you won’t encounter any unexpected mark-ups or hidden costs.
A version of this article was previously published on Propertywire.com.
Disclaimer: This article is provided as general information purposes only, and is not intended to cover all aspects of the topic. We recommend that you take professional and specialised advice before taking, or refraining from, any action based on the content of this publication, as this article is not intended to constitute expert advice. We do not guarantee, explicitly or implicitly, that the content of this article is accurate, complete or up-to-date. The information in this article does not constitute legal, tax or other professional advice from PagoFX or its affiliates.