James Coney, Daily Mail

WHETHER it was for a holiday home, retirement villa or investment opportunity, £12bn was spent on property in Spain by Britons last year.

On average, they spent £160,000 on their home abroad. Many were bought using mortgages with Spanish banks that charge lower rates than UK lenders.

But while most buyers take advice on contracts and laws, some are coming a cropper because they do not weigh up the cost of transferring thousands of pounds into euros to pay the Spanish bank loans.

With rates at Spanish banks starting at 3%, compared with 5% and above from UK banks and building societies, it is easy to see why buyers opt for a mortgage with a lender in Spain.

To make the monthly repayments on a Spanish mortgage and fund a deposit, buyers will need to transfer money from their home account.

Rates and charges will vary depending on which British bank or building society you are with, but one unexpected cost that most people encounter is a 'lifting fee'.

This is a charge by Spanish banks of £30 to £50 for every £10,000, every time that you transfer money.

One way round this would be to have an account with a bank that has branches in Spain and the UK, such as HSBC or Halifax.

Halifax's Spanish arm, Banco Halifax Hispania, will not charge any fees if you transfer money between the two. To pay €100,000, it will cost around £69,507.

HSBC will charge £10 per transaction and uses commercial exchange rates, which are often a bit better than normal tourist rates. For transfers from HSBC in the UK to a non-HSBC account in Spain, there is a fee of £21.

Most UK banks will charge a set fee of around £20 for each time you send money abroad, plus commission based on how much you are sending.

Exchange rates will vary from minute to minute, making it difficult to budget. One way to get round this is to go to a specific currency transfer agency, such as Moneycorp, which allows buyers to fix an exchange rate for up to two years. Many of these have deals with overseas banks so the lifting fee is cancelled out, too.

For large sums, Moneycorp will charge a one-off fee of £15, meaning that €100,000 will cost £68,885.

It also has a 'regular payments' package designed for people who want to move a set sum each month from one country to another. For £4 per transaction, customers can fix an interest rate for two years.

Bars For Sale in Spain