This is a big question
-and
there are normally many solutions available, depending on your UK equity
position, the price of Spanish property, and how much risk you are
willing to take, but roughly speaking 2 bedroom bungalows in a coastal
area, with services and amenities nearby, start from 120.000 Euros for
something half decent and detached villas from 225.000 Euros. It is
important to seek advice before diving in with Estate Agents - Click
HERE to ask your questions to an
independent Retirement Professional who does NOT sell property.
Back to Top
This decision will depend on
whether you want to rent in Spain, or can afford a second home and
also if you are confident that retiring to Spain will be permanent.
Arguably it is wiser to only sell the UK home if you are sure of your
long term plans and definitely wish to buy a property in Spain, which in
itself will require the proceeds from your UK house sale.
Back to Top
This is advisable if you are
unsure whether retiring to Spain is definitely what you want to do,
or you are unsure which area best suits your lifestyle aspirations. If
you do rent out, then make sure you have left it with an agency who can
do the maintenance and call-outs.
Back to Top
If you are undecided about
where you want to be, then renting makes sense. It is also advisable
in a market of dropping property prices. However, remember that moving
once is already an upheaval and moving twice might be too much. Also
rental properties are often equipped with cheap everything, and you are
normally prohibited from changing anything at all to make life more
comfortable. These are often major inconveniences.
Back to Top
As in all countries, prices
vary in Spain from area to area. The big cities are expensive, as
are the more popular coastal areas such as Marbella or Sitges. Here you
can expect London prices for everyday living and some of the most
expensive property in Spain. If the pension is limited, then going a
little way inland will reduce living costs substantially. In general
terms a Euro will buy you what a Pound does in the UK. As for a budget,
it is possible to live off 1200euros a month for a retired couple (with
no rental or mortgage costs), whereas 1600euros would be more
comfortable and allow for some flights back home, and 2000euros per
month or above will make retirement in Spain easy.
Back to Top
Mortgages are avilable up to
the age of 75 in Spain, and depending whether the land is urban or
rustic, will determine the percentage amounts you can borrow. Normally
you could borrow up to 70% of the cost of the property, paying 1% above
the base rate. Mortgages are expensive in Spain, as you need to pay a
mortgage tax of around 1.5% on top of the banks opening charge of
between 1 and 2%.
Back to Top
Some of the UK banks
operating in Spain do now offer equity release on your UK home. This
will obviously allow you to fund a Spanish home purchase using the
equity available in your UK property, meaning that you do not
necessarily have to sell it, thereby leaving it available should
retirement in Spain not be what you thought it would be. The main
disadvantage with this scheme is that it is expensive to arrange
and you may not be able to raise all that you need.
Back to Top
It is possible to have your
pensions and income paid directly into your Spanish bank account.
However it is important to set everything up correctly in order to
minimise bank transfer charges, Spanish reception fees and to ensure
that the best exchange rate is always achieved. Doing this properly will
save you thousands of Euros a year. (Click HERE
to find out how to maximise your income in this way)
Back to Top
Britains refusal to swap
Pounds for Euros does bring a UK pensioner a special risk not
experienced by his Northern European counterparts when retiring to Spain.
Whilst in the last five years the Pound has operated within a
fairly narrow band of 1.40 to 1.50 euros to the Pound (7% fluctuation),
historically the fluctuations have been much higher, especially with the
old Peseta where 50% fluctuations in under two years were fairly common.
Therefore budgeting is important and it is nalso advisable to consider a
"What If" scenario. In other words, if my pension income was to drop due
to the adverse exchange rate, then what would be the implications for us?
It is therefore important to have a Plan B to cope with this unfortunate
scenario.
It is advisable to have your
main asset (i.e. your house normally) in the currency of your income
and also that you are easily able to buy currency forward (a year at
least) so that you are assured of the immediate exchenge rate that will
be applied to your income. Any independent currency transfer specialist
will be able to advise you on this, such as
www.HIFX.co.uk or
www.currenciesdirect.com
In this way you can help
hedge and secure your income, hopefully avoiding nasty suprises. At
the very least, buying forward will provide a time cushion in which to
implement your "What If" scenario.
Back to Top
