How can I avoid transfer costs post-Brexit? Currency Q&A

What do we need to know before buying abroad?

My wife and I have never bought a property abroad, but we wish to retire to France as it has been our favourite holiday destination for over 30 years of marriage. What do we need to be thinking about in terms of purchasing our property?

Firstly, it is great that you are already asking the questions. There are many aspects of currency exchange that you need to be aware of when purchasing a property abroad. Many forget to factor this into their purchase and end up being caught out when it comes round to making the payments.

It is important to acknowledge that the exchange rate is likely to fluctuate during the process and that can end up affecting the final price you pay for the property. Once your offer is accepted you will need to manage the risk created by the exchange rates by utilising the guidance on the options available to you by your dedicated market specialist.

The decision will depend on your budget, market and personal circumstances. In some cases, it might be a good idea to protect the price agreed by locking the rate of exchange in advance.

How can I avoid charges for international payments post-Brexit?

I used my bank to transfer funds from GBP to EUR and it charged me for an international payment. I wasn’t used to this before Brexit. Is there any way to avoid it?

We have started to see some instances – since Brexit – where European banks have charged clients a fee when the funds are coming directly from outside the EU.

To avoid or minimise this it is a good idea to use an institution that has a license and local bank accounts in Europe. By routing the funds via Europe it is unlikely you will see a deduction from your French bank.

At moneycorp we are regulated to operate in Europe and supported by a good network of local bank accounts that allows UK clients to send funds in a cost effective way to Europe.

 

How can we maximise our budget without risking it to a drop in the exchange rate?

We have now found a property to buy in France and after paying the deposit we are waiting for completion in a couple of months. We are aware that the current rate is in our favour, though we are hopeful that the pound will get even stronger against the euro. However, by waiting we are concerned that the current volatility may change the rate dramatically out of our favour. We don’t want to lose our chance to exchange the funds with a higher rate but we don’t want to be exposed to a potential drop.

The couple of months that separate the purchase contract and the completion date will be subject to market volatility, evidently a risk or potentially an opportunity for your budget. Ultimately the decision will depend on the market but also on your personal circumstances.

If you are optimistic that the rate is likely to improve you can try to target an improved rate via a market order. A market order allows you to 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, you must bear in mind that there is always a risk that the market will take a different turn. If you are very sensitive to certain rate movements you can set up a stop loss order. By agreeing the lowest rate you can 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.