Sterling work: Exchange rates
When buying property overseas, the strategies you use for exchanging currency can make big differences to how much you pay, says Nadine Rodgers-Callan
Purchasing your new home overseas is a huge and exciting step in life, and possibly one of the largest purchases you can make. You want to make sure you know exactly where your money is going and that you’re getting the most out of it every step of the way.
One strategy that you can adopt is to use a foreign exchange company, instead of a bank. The latter often have less favourable exchange rates and may charge commissions on every international payment you make, which can end up costing you thousands! Foreign exchange companies can be just as safe and secure as banks, and often offer highly competitive rates without charging any hidden fees.
As an illustration, let’s say that your dream home has a cost of €150,000. With a currency exchange provider, you could have an exchange rate of 1.20, costing you £124,999 with no transfer fee charge.
Meanwhile, a high street bank would quite possibly use an exchange rate of 1.15, costing you £130,434 plus a £25 transfer fee.
In this example, the financial exchange provider would save you £5,460 – which would go a considerable way towards adding those features that would turn your purchase into your dream home.
The exchange market is often volatile, and at times, difficult to comprehend. It can be challenging to know when the best time is to trade or to predict which way the market will turn. This is where an FX provider can help you. These companies specialise in overseas transfers and have currency experts who watch the market constantly. They will also provide the advice you need when buying or selling a property abroad. In addition to highly competitive exchange rates (most FX providers do not make a profit on exchange rates) and the absence of hidden fees or charges (banks charge an average of £25 every time you transfer money overseas – and sometimes even charge a receiving fee as well), FX providers also offer a personal service, with a currency expert always on hand to help you with one-off payments or regular transfers. Most FX providers also offer online platforms, allowing you to trade from the comfort of your home whenever you like.
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The majority of FX providers will transfer your money within one to two days whereas banks can take up to five days. And, for additional peace of mind, you should ensure that the FX provider you use has been authorised by the Financial Conduct Authority (FCA). This way you can rest assured that your money is in safe hands.
TALK TO THE EXPERTS
When buying a property in France there are many things you need to deal with, such as language barriers, local laws and contracts in a foreign language. A good foreign exchange company will provide the best option for you in a simple, jargon-free way that puts you in control, turning what can be an overwhelming experience into a straightforward one. Whether you are in the first or final stages of buying abroad, a good FX provider will give you guidance and a personal service, keeping the process as simple as possible.
CHOOSE WHAT’S BEST FOR YOU
There are a range of financial exchange products that can be tailored to your every need. After all, getting the most from your money relies a lot on the timing – rates fluctuate constantly and are often hard to predict. Among these, the most well-known is arguably the forward contract. This product allows you to fix an exchange rate for up to a year. It’s great for customers who know they need to make a payment in future and like the exchange rate today. Forward contracts also help you to budget as you know exactly what your transfer is going to cost you. This makes it a very useful and cost-saving method for buying property overseas.
There is also the regular transfer, which is a good product for you if you need to make regular foreign currency payments, such as paying a monthly mortgage. You set up a direct debit and get a fixed exchange rate.
Then there are spot contracts, which are handy for one-off transfers. If you need to send money right here and now, the rate is agreed on the spot and your money is sent straight away.
If time is not of the essence, you could use a rate watch service. This is a useful product for those who want to make an overseas transfer that is not time sensitive. You can get a currency expert to do the work for you and ask them to watch the market on your behalf. Once your target rate has been achieved they will contact you right away so that you can make the payment in a cost-efficient way.