A currency specialist can help you protect your budget
When purchasing a property abroad, there is a generalisation that exchanging the funds into Euros is a certain additional cost. This common misconception may be a slight surprise to those with this view when they are introduced to a market specialists. Managed well, you also have the opportunity to improve your budget with the exchange rate. Below we will explain how this is the case
What to consider:
When purchasing a property abroad, whether it be a holiday home or a new change of life, the process is meant to be exciting. However, since you are purchasing a property in a different country to your own, you are faced with the additional factor of currency exchange.
During times of volatility, the exchange rates can fluctuate hugely and in some cases could be the difference of a new kitchen. In some cases, the exchange rate could change considerably in your favour or not between the beginnings of your search to the day of your completion. To help protect your budget during this period you can use a number of tools provided by a currency specialist to protect your budget from negative movements.
The first thing you need to distinguish is your budget range. This will include whether you will be purchasing the property with cash or you will require a mortgage to fund the property.
Once you have decided this you will also need to factor in the taxes and the Notaire fees.
To some, the currency exchange can be seen as an additional cost to purchasing a property abroad, however, this is not necessarily the case. In some circumstances you can use the rate changes in your favour in order to reduce your overall costs.
What can you do?
Using a currency specialist opens the door to a multitude of options for you. You have access to a competitive rate of exchange and the expertise of a currency specialist whose role is to help you plan your transfer to make the most of your money. They will understand your situation and support you by tracking the rate and guiding you on when is the best time to trade, making your money go further.
Here are an example of a few of the tools available to you and how they can benefit your exchange:
- Spot contract- A spot contract is an agreement between you and your FX provider to exchange money and buy foreign currency at the present exchange rate. This is the most common and traditional form of currency exchange and is suited to addressing any imminent currency transfer needs you may be.
- Market order- you could target a rate of exchange and if that rate is then hit, we could either buy the funds for you automatically, or notify you for your permission to buy. With the same principle we can set up a limit order to protect your transaction in case the rate falls below a certain level. This suits those who have some time on their hands and are optimistic that the rate might improve within their time frame. One of the advantages of the market order is to ensure that the currency is bought at the desired level even if the market only touches that level very briefly – and this includes when the markets are closed for trading.
- Forward contract- This allows you to fix a rate of exchange up to two years in the future in advance of a payment. This tool is very popular among property buyers as it allows them to fix the whole price of the property ahead of completion giving them the peace of mind and the certainty of how much they are going to pay for the property. But it is also a great way to take advantage of a positive rate movement. (Please not forward contracts may require a deposit)
With the current volatility in the market and the GBP/EUR exchange rate at 1.16, it is more important than ever to get some expert guidance ahead of your payments. The rate can move in any direction and you can utilise these tools available to you to protect your budget. The sooner you get in contact with a specialist, the more time you have to plan your transaction, save money on the rate and remove the risk of currency fluctuations.
With a Platinum Trusted Service Award 2020 from independent review site Feefo and 40 years of experience in the industry, FrenchEntree has been recommending moneycorp for more than 15 years. During this time they have helped thousands of client planning the best way to pay for their property as well as supporting them afterwards with any further payment from paying bills, mortgages to repatriating UK pension payments for those who have retired to France.
Furthermore, we have worked with the same person at moneycorp for more than a decade! You might be familiar with her as she often writes for our FrenchEntree magazine. She has 13 years’ experience in foreign exchange, and is a qualified European lawyer with experience in European transactions. Mar will be happy to answer any questions or enquiries to support you through these difficult times
Opening an account is really easy and free of cost. You can register online or over the phone in a couple of minutes and for FrenchEntree there are no transfer fees in any payment.
Lead photo credit : Avij Wikimedia Commons
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