When buying overseas it is important to consider the impact that exchange rates might have in the different stages of the process. Moneycorp helps you to understand the best way to deal with the foreign exchange element in all the aspects of the transaction, before and after finding your property in France.
Step 1: Finding your property
When buying abroad, majority of buyers consider the most important factors to be the three p’s; property, picturesque location and price. However, buyers often forget to factor in the added element of exchange rates that we aren’t used to when buying domestically. This is why, factoring in the exchange rate should always be front of mind.
Did you know that you can open an account with Moneycorp – free of cost and obligation – even before you have found a property? The big advantage is to become familiar with the rates and your options before you travel to France to find your property. This will help you to budget and know your margin for minor rate fluctuations.
Step 2: Making an offer
You have found the property you were looking for. Is the price right for your budget? It is advisable you check the exchange rate before you put an offer on the property. How much is the property costing me in my local currency?
Furthermore it is important to take that rate as a reference for the future stages as it will serve you as a guide and a benchmark for future transactions.
This is where having an account in place with Moneycorp really helps. You can email or call your personal dealer directly – even if you are in France – and request an update on the rate which will help you with your offer to the seller.
Step 3: Paying for the property
Unless you are buying an off plan property you will be facing three payments towards the property:
- The deposit – usually 5- 10%- becomes payable once the compromise de vente –or purchase contract- has been signed and the 10 days cooling off period has expired.
- Completion funds – As an average completion tends to take place 2-3 months after the compromise de vente. The signature of the Title Deeds takes place in front a French Notaire in France. The final funds will have to be wired directly to the Notaire’s account.
- Taxes and Notaire’s fees – You will need to add this to the completion funds payable at the time of signing the Title Deeds.
Moneycorp will help you to monitor the exchange rates through all the above payments by offering you personal guidance but also different tools to manage your risk.
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.
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.
Step 4: After the property purchase
Once you own the property you may continue to be exposed to the fluctuations of the exchange rates. Maybe you decide to embark in a lengthy renovation project or you are thinking of renting the property out and bring the proceeds back to your home country. Perhaps you have decided to retire in France but your pension is still being paid at your local account or you have taken a Euro mortgage and face monthly payments.
In any case, there is likely to be some maintenance expenses –utility bills and local taxes- that you might need to cover.
In these cases Moneycorp can still help you cover these costs in the most cost effective way. You can use their online platform to manage small payments. Plus in some cases you can access a regular payment plan which will allow you to set up a direct debit and even fix the rate on small frequent payments for a period up to two years.
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.
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