Q&A: How to manage the currency risk when buying a property in France?
Last week, Moneycorp featured as a panellist on French Entrée’s webinar discussing some of the aspects involved in a property purchase in France. Moneycorp were invited as a trusted partner of French Entrée to provide some guidance on the best way to exchange your funds when planning your transaction. As a result, we received many questions from those attending and so we have answered below a few below.
How does a currency specialist compare to the Bank?
For those who are not often exposed to foreign exchange, using your bank may seem to be the only available option to help you to transfer your funds. As it is not their sole business, they are not as competitive in regards to the rate they provide. As an average a foreign exchange specialist such as Moneycorp can represent a saving of around 2% in comparison with a high street bank. We also do not charge any fees on transactions which are often added when using the bank.
Furthermore, a currency specialist will have the added benefit of a market specialist who will help to guide you through your payments and offer tools to help manage your payments.
I am used to using a different currency provider, what more can Moneycorp offer me?
If you are using a currency specialist, you are already in a good position, and many offer good services for the smaller exchanges.
When it comes to larger payments, such as the likes of a property purchase, using a service approached currency specialist will open the doors to many more benefits to protect your budget and manage your payments.
Many currency brokers are solely a digital platform, with no one to one interaction and support over the phone. Moneycorp offers every customer a dedicated currency specialists, free of charge with no obligation to use, who will provide a bespoke service to fit your requirements and timeline. They will also offer many options that most currency brokers and the bank do not offer. These are useful tools such as forward contracts –allowing you to lock a rate in advance- or market orders –which give you the chance to target an ideal rate.
How can I benefit from locking a rate in advance of my upcoming payment?
With a foreign exchange company like Moneycorp, you have the option to use a forward contract which allows you to lock a rate in advance of an upcoming payment. This currency tool is very popular among those looking to buy a property abroad. There are two main reasons why you would lock the rate ahead of completion of the property:
- To take advantage of an exchange rate movement in your favour
- For those a little risk adverse, it will eliminate the risk of negative fluctuations and have the certainty of knowing how much you are paying for your property. This is especially important if you have a strict budget or you cannot afford a change on the rate.
Another advantage is that you do not need the entire balance of your desired transaction in order to lock in the rate. Instead, you will need to deposit a percentage of the full amount you intend to lock –up to 10%. This is not a fee, but will secure your payment which will require you to pay the remaining 90% on the day of completion. This can be done up to 2 years in advance of a payment.
We have just bought a property in France where we will be relocating permanently. My husband has recently retired and will be receiving his monthly pension into our UK bank account in pounds. I will still be working for my current company that are based in the UK but remotely from France and will be receiving my salary in pounds. What is the best way to manage this once we are living in France?
A currency specialist such as Moneycorp, have offerings to help you manage your regular payments.
One option is a regular payment plan. The main advantage of this is to automate the payments and remove the hassle of organising a transaction every month. Moneycorp will collect the payment via direct debit and send it automatically to your bank account of choice in France.
Furthermore, to ensure you have security of the amount of funds you will be receiving each month to cover any cost of living, you can fix the rate on your regular payment plan for up to 24 months. This will give you the certainty of knowing how many euros you will receive every month and protect you from the rate moving negatively against you.
Alternatively, if you are happy to make your payments sporadically you can manage your payments via our online platform, or receive expert guidance from our market specialists on the best time to exchange the funds.
When is the best time to open an account?
There are no pre-requisites for opening an account. When it comes to making an international payment, especially on a transaction size of a property purchase, the sooner you open an account and receive some guidance the better. Getting familiar with the rates and your options ahead of time will help you setting up your budget and if you find a property you can use the guidance from your dealer to come up with an offer and plan the best way to pay the deposit and any further payments involved. Not only this, but our services are completely free of charge and carry no obligation. So if you change your mind we can close the account with no hassle or cost.
With a Platinum Trusted Service Award 2020 from independent review site Feefo and 40 years of experience in the industry, FrenchEntrée 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 French Property News 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 FrenchEntrée readers there are no transfer fees in any payment.
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