The adviser noted that buyers using one of 19 major currencies, including sterling, are allowed to convert the loan from euros into another currency by some lenders.
The list of currencies allowed includes UK pounds, Swedish krone, Swiss francs, Singaporean, Australian and New Zealand dollars.
Offshoreonline said the 19 currencies are defined as convertible by at least one major lender in Spain.
This means that at one point in the life of the mortgage, the borrower has the right to convert their existing debt in euros against a home in Spain into their home currency, wiping out currency risk in one quick move.
Brexit hitting sterling
Guy Stephenson, director of Offshoreonline noted that a lot of buyers do not fully understand the importance of currency risk in a long term contract, such as a mortgage.
“Over time, the relationship between currencies can and does move – look at sterling versus the euro since the Brexit vote,” he said.
“Buyers of Spanish homes in the UK have seen the effective cost of their euro mortgage repayments rise by around 20 per cent since 2016.”
“For an older buyer or someone whose earnings are not on a steadily upward trend, that borrower may well want to convert their loan back into, for example, sterling, if they are UK resident or paid in sterling and so remove currency risk entirely,” he added.
The adviser also noted that safety features such as this or the ability to extend a loan to reduce monthly repayments were often a characteristic of a euro mortgage.
“Buyers need to therefore consider the longer term and what strategies they could deploy in an emergency,” it added.