Find your perfect villa rental with Villas4You over 500 villas across 20 destinations

www.holidaylettings.co.uk online advertising for home owners abroad

Holiday home insurance from intasure - Click Here UK insurance for your property overseas

Reserve your overseas currency online - for a high street beating rate!


Foreign Property Purchase: Currency Issues

The benefits of using a currency specialist

Currency specialists offer the following benefits to those making international money transfers:

  • They usually offer exchange rates that are more competitive than those typically available through the high street banks. This is because they buy and sell huge sums of currency and do not have large banking infrastructures to support. They can, therefore, be more generous with the rates that they offer, which can save you up to 3 per cent on your transfers

  • They typically offer reduced transfer fees and can eliminate receiving bank fees on your transfers, which can save you up to £40 per transfer plus any receiving bank fees that you would have been charged for transferring money through your bank

  • They can help to protect you from adverse currency movements and enable you to take advantage of any exchange rate movements that are in your favour. This can be done even if your funds are not available or you do not need to make a transfer at the particular time when the favourable exchange rate movement occurs. There’s more about this in our next section.

    Beating exchange rate fluctuations

    Spot transactions

    If you have all the necessary funds already available to purchase your property abroad, one option to protect yourself from currency fluctuations is to arrange what is called a spot transaction, or spot contract. This is pretty well instant (within two working days), and secures your funds in line with the exchange rate at the time at which the transaction takes place. They can then be transferred to the vendor or estate agent in due course, as required.

    Forward transactions

    If you do not have the funds immediately available to buy currency on a spot transaction, you can benefit from a type of ‘buy now, pay later’ arrangement known as a forward transaction, or forward contract, whereby you fix the exchange rate at the current level for an agreed completion date up to 12 months in the future. To do this, you must have access to a minimum of 10 per cent of the funds initially, to use as a deposit. You then pay the balance as stipulated in the contract.

    The benefit of using a forward transaction is that the price is agreed now, so you know exactly how much you will be paying, but you do not have to part with the entire sum until closer to the date when your property purchase is completed. This is good for your cash flow.

    Regular payments

    As more and more people take out currency mortgages on overseas property, there is an increasing need to make regular overseas payments – typically, mortgage payments or pension transfer payments.

    These payments, by their nature, are smaller than the outlay required for the initial property purchase, but the costs can soon add up unless you shop around.

    Currency specialists typically offer a regular payment service, which will be cost-effective for you, as exchange rates will be competitive and transfer fees low. The savings to you could total more than £500 per annum if you make your regular transfers through a specialist rather than through your bank.

    What is more, most regular payment services offer a direct debit facility, so you can avoid the hassle of having to arrange each payment individually. Once a plan is set up, it is usually ‘good until cancelled’ – that is, your payments will be made automatically unless you cancel the plan or your direct debit.

    Choosing a currency specialist

    There are many specialist currency firms in the market, which is good news for customers, as competition helps to ensure competitive rates of exchange and a high standard of customer service.

    In selecting a company, you should consider the following:

  • Has it been established for some time and therefore gained the relevant market experience?

  • Is its financial information and background transparent and easily accessible? For example, does it publish its annual report online?

  • Does it have any quality standard accreditations, such as ISO?

  • Does it offer extended office opening hours, to enable you to conduct your business at a time convenient to you?

    In conclusion

    To make the purchase of your overseas property as straightforward as possible and avoid incurring unnecessary costs, you should do your homework and consider all the legal and financial issues before you sign anything.

    Making regular payments on an overseas property can add substantially to the costs of your purchase, yet the majority of these costs can be eliminated with a bit of planning. Never has the saying ‘it pays to shop around’ been more relevant, so make sure that you do.

    Finance can be a complex subject. Don’t be afraid to ask questions, and insist that the answers are given in straightforward, jargon-free language.

    Many people get caught out unnecessarily. Don't be one of them!


    More pages

    Page 1: Your overseas property purchase
    Page 2: Receiving bank fees
    Page 3: The benefits of using a currency specialist

    Calculate how much you can earn - rent out your holiday home here

    The best villa holidays from James Villas with our hand-picked villas and all the support you need in resort, we're the number one choice

    Travel insurance from £2.99 - Columbus Direct for instant worldwide travel cover

    Reserve your overseas currency online - for a high street beating rate!


    • Browse our articles written by leading industry experts:

    Overseas Property Buying Guides

    UK Property Guides

    Gardens and Interiors

    Cosmetic Surgery Fact Sheets

    Looking Good Guides

    Money

    Business

    Community

    Travel