Thursday, 1 May 2008

Buying a villa in Marbella in Sterling

Euro - Sterling relationship
Now the American dollar is weak, the English can be happy that the EU membership gives strong financial ties with the Euro. Had the dollar fallen this much 10 years ago, Sterling would have suffered with it 100%. Now Sterling remains strong, even though the dollar is closing at alarmingly low exhange rates.

Buying a property in a different currency can be done in many different ways, mainly depending on which way you think the dollar (and with it the Sterling) will be heading the next many years.

Most people think the dollar will continue it's fall. Maybe that is correct, but for how long?
The war in Iraq has cost a lot for the Americans, and the new president may not be willing to continue such spending. Our guess is that the first task for a new president will be to secure the financial situation in USA. This will mean that the dollar and with it the British Pound will eventually go up again.

Use a Spanish mortgage in Euro
If the British Pound is about to go up, or at least within the next 5 years or so, it is best to take out the mortgage in Euros. By having a Euro mortgage, the total loan will be reduced in value as the British Pound regains it's strength.

The Spanish banks offer mortgages between 70 - 80% of the title deed value. However most English banks present in Spain offer Euro mortgages under conditions similar to those in the United Kingdom.