If you’ve made up your mind that 2020 will be the year you do it and buy your very own ski home – or you’re thinking of selling and moving up the market – there’s one thing you’re going to need before anything else: a realistic budget.
Buying from abroad means that drawing up a budget for a ski home can be complicated. How do you account for currency differences? What about purchase costs? It might seem a bit opaque, but our top tips explain how to get a realistic idea of your price range.
1. Work out how much capital you have available
The first step is to determine how much capital you have readily available. How much do you have in accessible savings? Do you have any gifts or inheritances? Do double-check if any of your money is not easy to draw down – some accounts might be locked for a certain amount of time, or may require payment of a fee, so be sure to deduct that.
2. Work out how much capital you can raise
Then, consider your potential raised capital. If you’re selling a property, how much is it likely to go for? Try to budget for the average market price, rather than your dream price. Do you have any physical assets, such as artwork or furniture, that you’d like to use to raise money? If you need a mortgage, be sure to speak to an advisor to find out much you could borrow. Remember that mortgage advisors can access deals not always available to the general public, so it can be well worth speaking to them.
3. Discuss with a currency specialist your foreign-currency budget
With a clear figure for the capital you have available in your home currency, speak to your currency specialist about how you will transfer it into euros, francs, dollars or any other relevant currency when it comes to purchase.
A quick Google will give you an ‘interbank rate’ of how much your money is worth, but that isn’t available to the general public for transfers. More importantly, the markets never stop moving, which means that your money’s value in another currency never stops changing.
In many of the top skiing countries, including all Alpine nations, you need to pay a reservation deposit and then, some months later, pay the rest upon completion. Within those months, the markets will move, and any drastic drop could leave you scrambling to find thousands extra to ‘top up’ your budget, so that you can still afford that price.
In other words, knowing your budget in your home currency is only half the story. You need to know how much it will be in the purchase currency, and the only way you can do that with certainty is to secure a fixed exchange rate. This means that you benefit from the same rate for up to twelve months, no matter how much the live markets rise and fall. Find out more in your free Property Buyer’s Guide to Currency.
4. Work out your buying fees and costs
Now that you’ve got a clear, defined budget for a ski home purchase in the currency you’re actually buying in, you can start subtracting the buying fees to understand how much you have for the house.
In most countries, you’ll want to consider the following:
- Estate agent’s fees: some countries, like France, normally have the buyer paying these
- Solicitor fees: a bilingual solicitor will be crucial in helping you navigate another legal system
- Survey fees: not all countries have a custom of surveys, but it is often advisable to have one
- Notary fees: these vary between countries and regions, but are usually 0.75-4% of the property price
- Taxes: Include any taxes, such as VAT, that you’re liable to pay – but also deduct those you might be exempted from, such as if you’re buying a leaseback property in France.
5. Include any selling costs from current properties
If you are selling an existing property, then you might need to pay capital gains tax on it – so be sure to include this in your overall budget.
6. Bring it all together
Put together all your potential capital figures, minus your outgoing from above, and you have a strong sense of what you can afford, leaving some over for any unexpected costs. You may well find that you can afford more than you think, particularly in countries with low taxes.
To find out more about drawing up a realistic budget for a ski home, and how to safely send your money overseas, make sure to download the Property Buyer’s Guide to Currency.