We have just found a property and are about to sign the compromise de vente and pay the 10%. However we are concerned that the rate might move substantially from now to completion at the beginning of February and can no longer afford the property.
The time between the purchase contract and the completion is always an open field. The couple of months that separate both moments can pose a risk and an opportunity for your budget and deciding the best thing to do is not easy. Ultimately the decision will depend on the market but also on your personal circumstances.
If you are positive that the rate is likely to improve you can try to target an improved rate via a market order. A market order allows you target a desired rate and set up an automated payment conditional to that rate. Therefore if your target is achieved we will automatically buy your euros at the agreed rate.
However there is a risk that the market might take a different turn. If you are very sensitive to certain rate movements you can set a stop loss order. By agreeing a rate below which you cannot afford to exchange your funds, the order will be executed before the market drops to that level protecting the value of your transaction and your budget.
Another tool often used by property buyers are forward contracts which allow you to fix the rate of exchange ahead of a future payment. There are mainly 2 reasons for a property buyer to fix the exchange rate ahead of completion. One, to take advantage of a rate move –even if you don’t have full availability of funds- and second to fix the price, protecting it from any negative rate fluctuations, giving you the peace of mind and the certainty on how much the property will cost you.
The way to decide to manage the risk will depend entirely on your attitude to risk and your circumstances so often the solution that might suit one buyer might not be the best for another. And this is why it is important to get some guidance.
A foreign exchange company such as moneycorp treats each customer as unique and with this in mind each account is assigned to a personal dealer who will discuss the personal circumstances with the client (budget, timeline, personal circumstances…) in order to guide them on the best time and best way to exchange the funds from the deposit to the completion funds.
What to do next?
Opening a currency payments account is really easy and free of cost or obligation. You can register online or over the phone in a couple of minutes and for FrenchEntree there are no transfer fees for any payments.
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 : Proeprty buyers (C) Towfiqu barbhuiya, Unsplash
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