Fixing the exchange rate, how it works



Fixing the exchange rate, how it works

Buying a property in France can be an exciting venture. Deciding the region where you would like your French house to be located is one of the first and more challenging decisions to be made with 13 regions to choose from.

Deciding how much you can afford to spend is also tricky. Whether you need a mortgage or you can afford to pay cash, you will need to establish your budget and to do so you will need to bear in mind all the costs involved in the purchase with the most obvious being the taxes and the Notarie fees.

Not all the potential buyers in the early stages identify a very important cost that could affect the final price for your property. In fact it could make or break their budget. The payment will need to be made in Euros and this will involve being exposed to the fluctuations of the Sterling-Euro exchange rate.

Events like BREXIT have brought a great sense of uncertainty and pressure on Sterling and have forced lots of buyers to adjust their budgets or giving up on their dream to own a property abroad. So, how can a buyer avoid the negative impact that these fluctuations can have in the final price for their property? One of the popular solutions can be fixing the exchange rate in advance through a forward contract.
Typically forward contracts are being used for one of two purposes (sometimes even for both):

  1.  To achieve certainty on the property price when signing the compromise de vente: For some buyers knowing how much is that property going to cost the day they come to pay for it –when signing the Deeds- is as important –or more- than achieving a good exchange rate. Would you buy a property in your country without knowing how much would you pay for it? Probably not, so why deal with this uncertainty when buying abroad.
  2. To take advantage of a favourable exchange rate movement – A forward contract allows you to fix a rate in advance –even for 2 years- with no cost by only putting down a 10% deposit.

You can also decide to fix the rates on smaller payments such as mortgage repayments, pension transfer or payment of regular maintenance expenses.

Should you want to receive more information about rates and how to make the most of your international payments you can register for free with Moneycorp. Plus with FrenchEntrée you are entitled to FREE transfer fees on all your currency payments.

mar bonnin palmer

Mar Bonnin-Palmer is a Senior Key Account Manager at Moneycorp, a foreign exchange expert and a specialist in currency transfers for overseas property. For more information, please visit the FrenchEntrée Currency Page or call +0044 (0) 20 3773 6355.

Click here to register for FREE today with Moneycorp

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