Managing Your Foreign Exchange Requirements for an International Property Purchase
Why should you look into your foreign exchange options when buying property abroad?
We all know that moving house can be stressful, but uprooting to a new and possibly unfamiliar country can come with additional hassles, like navigating language barriers and foreign laws.
Another issue attached to buying property in a different nation is getting your funds converted to the currency needed to pay for it. In other words, you’ll need to get to grips with foreign exchange. Anyone who has holidayed abroad and converted spending money has engaged with the currency market on a small scale, but moving the kind of sums involved in your average property purchase requires more forethought and planning. How you choose to move your money could see you thousands of Pounds better or worse off so it really pays to explore what options are available.
The two kinds of institutions most commonly used for managing international currency transfers are banks and foreign exchange brokers. While it’s easy to assume that using your bank is the most straightforward of the two options, a leading currency broker might actually be able to offer you a more convenient and cost-effective service.
What benefits do brokers offer?
If you do a little research and select a reputable broker with a longstanding reputation for customer care and money-saving services, you could benefit from the following;
- Bank beating exchange rates – by working off different margins to banks a broker should be able to beat the exchange rate they can offer by over 3%.
- Fast, free, secure currency transfers – while banks tend to levy transfer fees and commission, leading brokers won’t charge you a thing for moving your money.
- Market insight – some brokers will supply you with free market updates so you can stay on top of the latest currency movements.
- Risk-management solutions – specialist services and support designed to help you protect your transfers from exchange rate volatility.
Some brokers will even assign you a personal Account Manager, a currency specialist able to offer expert guidance and talk you through which services might best suit your transfer amount and timeline.
A service offered by brokers that can be particularly useful for anyone buying property abroad is being able to fix a favourable exchange rate for up to two years in advance of a trade. Being able to secure a rate in this way can help you budget more effectively and keeps the price of the property you’re interested in constant, no matter how long the house sale takes to go through.
In fact, through a combination of better exchange rates, charging no transfer fees or commission and offering access to specialist services, some currency brokers could save you up to 5% on your international money transfer compared to using your bank.
Case Study – Jack saved €15,000 on his property purchase
With retirement looming, Jack wanted to buy a property in France roomy enough for his grandchildren to come and visit. Jack had £250,000 to spend on his purchase and decided to make enquiries with his bank and a couple of currency brokers to see what kind of rate he might achieve.
In August 2015 his bank offered a Pound Sterling to Euro (GBP/EUR) exchange rate of 1.35, which would give Jack €337,500 to spend (minus administration fees). After contacting a broker, Jack found that he could achieve an exchange rate of 1.41, which would give him €352,500.
Without even taking into account how much money he saved by not paying any fees or commission costs, Jack was €15,000 better off – money he was later able to spend on furnishing his property and return visits to England.
If you’re planning a foreign property purchase and want to get the best deal on your currency exchange, research your options and talk to the experts to find out how much you could save.