How can I maximise my budget when buying in France?

I am looking to buy a house in France on a fairly tight budget so every penny counts. What can I do to mitigate the volatility of the pound in these uncertain times?

Mar Bonnin-Palmer of Moneycorp responds:

It helps to understand the market, how the process of currency exchange works and what you’re likely to get for your money. So it is advisable to plan in advance and get some guidance ahead of the purchase. I always advise our customers to look at the exchange rate before heading to France to look for properties. This will help you in setting your budget and knowing the value of your funds.

If you find a property and decide to make an offer, take note of the exchange rate as this will give you a reference to choose the best time to exchange your funds. Anything above that rate will maximise your budget and anything below might have an impact on your budget making your property more expensive than initially planned. Once you sign the compromis de vente, and after the cooling- off period, you will be asked to pay a deposit, usually 5-10%. Due to the immediate request, you might not have a lot of options when it comes to paying the deposit, however, it is a great time to check the market again.

If the rate is at a level that works with your budget, you can then decide to lock the rate in advance of completion through a forward contract.

By fixing the rate you are also fixing the purchase price, removing any uncertainty or any impact from negative rate fluctuations that might take place while you are waiting for completion.

Forward contracts are a great tool to manage your budget and ensure you don’t pay more for the property. They can also help you to maximise your budget by taking advantage of a favourable movement on the rate. When booking a forward contract, note that:

• You won’t need to pay the full amount until the contract comes to maturity so it is an ideal tool for those with no access to the funds, however, you will need to account for 10% of the full amount as an advanced payment at the time of fixing the rate.
• Once you fix the rate via a forward you are locked into a binding contract by which you need to transact at the rate agreed. If the rate has improved above the level fixed, you won’t be able to access that rate.

A foreign exchange specialist company can provide guidance and insight to help you set your budget and manage your expectations ahead of your purchase and with no extra cost. A specialist can also make you aware of any scheduled events in the short term that could substantially vary the rate. With the right support and guidance, you can use currency exchange tools to target the highest available rate within your range and protect yourself against any sudden drops in the value of the pound.

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