Transferring money to France
In order to pay for your dream home across the Channel, you will need to send funds to a French bank account. Laura Parsons shares the simplest ways of making the move
Establishing roots and having four walls to call your own is an important part of life for many of us, but as buying a property is one of the largest purchases you can make, it’s an investment which requires serious thought and forward planning.
As well as being a major financial investment, purchasing a property is a significant personal investment and can secure your happiness and stability for years to come – so it’s important to make sure the process of acquiring your home goes as smoothly and cost-effectively as possible.
Taking the plunge and moving forward with a purchase is daunting enough when the property is situated in familiar surroundings and the legal processes involved are the same as those navigated by your friends and family.
And yet when you’re buying a property in a foreign location and having to jump language barriers, vault bureaucratic hurdles and manage currency exchange, the whole experience can feel a little overwhelming.
However, if you’ve researched locations, tallied the sums and still have your heart set on moving to France, there are ways of simplifying the situation, such as using a reputable currency broker to handle your foreign exchange requirements. Taking advantage of their services can make your transaction run more smoothly, making your dream of owning that chic Parisian apartment or rambling provincial farmhouse that much easier to achieve.
While banks are able to transfer funds overseas, they usually add on transfer fees and commission whereas currency brokers will carry out the same transaction at no cost to you. Banks also rarely secure clients the best exchange rate available, and this can lead to them losing out on thousands of pounds.
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For example, when buying a property priced in euros the exchange rate you are able to secure can make a huge difference to how far your pounds will stretch.
After the eurozone returned to growth in the second quarter of 2013, the euro strengthened considerably, resulting in a difference of seven pence per euro between its highest and lowest points across the year.
While seven pence might not seem like much, when you’re transferring the kind of sum involved in a typical property purchase the right exchange rate can have a huge impact on your wallet.
To put it in real terms, if your dream home costs €250,000 it would set you back £202,500 if you moved your money across at a rate of 81p/euro. However, if you made your transfer when the exchange rate was at 88p/euro that same house would cost you £220,000. That’s £17,500 more!
Reputable currency brokers offer a range of specialist services and can provide expert guidance to help you make your trade at the most lucrative time. With their support you could save thousands, which is enough to put towards renovating your new property, buying a new car or simply making your fresh start in France a little more comfortable.
When it comes to currency exchange there are several contract options available. Choosing the right one is vital as some property sales can take up to a year to finalise, and in the time that passes between making an offer on a house and exchanging contracts the currency market may have moved significantly – meaning that your purchase could cost you more than you had planned.
That’s where the specialist services offered by currency brokers, such as ‘forward contracts’, are so useful. With a forward contract, clients are able to fix a favourable rate for up to a year.
As exchange rate pairings like the GBP/EUR can fluctuate by as much as 10% in just a few weeks, fixing a good rate up to 12 months in advance of a trade means that you can protect your funds from adverse market movements and budget for your property purchase more effectively.
Similarly, limit orders and stop loss orders help you to minimise currency risk and capitalise on opportunities. With a limit order a currency is automatically purchased once it hits a pre-determined rate. A stop loss order, on the other hand, allows you to set a maximum or minimum boundary on your currency. Once the market rises or falls to that boundary your currency will be traded straight away.
Both order types could be used when making a property purchase, and may even be deployed in conjunction for extra protection. By talking through your personal requirements with a currency specialist you can find the best solution for your needs.
Currency brokers with a reputation for high-quality customer service may also assign you a personal account manager. Instead of being passed around a call centre or having to explain your situation to a different person every time you have a query, your account manager will be a constant point of contact for all of your foreign exchange requirements.
These currency specialists are there to talk you through any concerns you may have, and to guide you through the process of foreign exchange if you’re new to it. They will also assess your requirements to make sure your trade goes through at the most opportune time. With their knowledge and experience they can provide expert guidance and support throughout your international property purchase and keep you up to date with the latest market movements and currency trends.
The regular market update service offered by some currency brokers may also help you choose the best time to make your transfer. The currency market is volatile, and staying on top of all the peaks and troughs can take a lot of time and effort, but with analyst-compiled daily and weekly currency updates delivered straight to your inbox, you’re always kept informed of important developments.
Furthermore, once you’ve bought your dream French property, currency brokers can continue to help you save money. As a result of the transfer fees and commission charged by banks, managing overseas monthly mortgage payments can become quite expensive, but all those additional costs can be avoided if you set up a regular overseas payment scheme with a currency broker.
A regular overseas payment scheme transfers money quickly, securely and free of charge. The transfer is made at the best possible exchange rate and carried out automatically on a date of your choosing. As well as saving you a considerable amount of money, managing your regular currency transfers in this way ensures that you never need to worry about late payments.
So while engaging the services of a currency broker might seem more complicated than using your bank, not to mention a bit daunting to begin with, it really could pay dividends in the long run.
If you are planning an overseas property purchase then having a chat with a reputable currency broker could help you achieve much more for your money and save you thousands on your new French home.
Laura Parsons is a currency analyst for Tor FX
Tel: 01736 335233