How to Manage the Currency Risk When Buying a Property Abroad? Your Questions Answered

For those that tuned in, French Entrée hosted a webinar of panellists discussing some of the aspects involved in a property purchase in France. Moneycorp was very happy to participate once more and bring some guidance around the best way to exchange your funds when planning your transaction. We received many questions from those attending, some of which we are bringing to you today to help you understand some of the hot topics around this subject.

Why use a foreign exchange specialist rather than my bank?

For those who are not exposed to foreign exchange often, using your bank may seem to be the only available option when it comes to exchanging currency. Although banks perceived as the easiest option, currency exchange they often don’t provide you with a competitive rate. As an average a foreign exchange specialist such as Moneycorp can represent a saving of around 2% in comparison with a high street bank plus with a bank you can often incur in expensive transfer fees.

Furthermore, high street banks aren’t usually offering clients guidance on how or when to exchange their funds. And as we know timing is key when dealing with exchange rates.

I use another currency broker, Why Moneycorp?

By using a currency broker you are heading in the right direction, and many offer good services for the smaller exchanges. Now, when it comes to larger fund transactions and in particular, property purchases, Moneycorp offers that edge that you need. Unlike many currency brokers, Moneycorp offers every customer a dedicated currency specialists, fee free, who will provide a bespoke service to fit your requirements and deadlines. They will also offer many options that most currency brokers and the bank do not offer. These are useful tools such as forward contracts –allowing you to lock a rate in advance- or market orders –which give you the chance to target an ideal rate.

What are the advantages of locking the rate in advance?

With a foreign exchange company like Moneycorp you can lock the rate in exchange of a payment via a forward contract. This currency tool is very popular among those looking to buy a property abroad. There are two main reasons why you would lock the rate ahead of completion of the property:

• To take advantage of n exchange rate movement

Or/and

• To remove the risk of negative fluctuations and have the certainty of knowing how much are you paying for your property. This is especially important if your budget is very tight or you can afford a change on the rate.

Another advantage is the fact that you are able to use this tool even if the funds you want to use for the transaction are not yet available to you. However you will need to bear in mind that to lock the rate you will need to deposit a percentage of the full amount you intend to lock –up to 10%. This is not a fee, but will secure your payment which will require you to pay the remaining 90% on the day of completion.

 We are looking to relocate permanently to France. My husband has now retired and receives a monthly pension in the UK. I will still be working for my current company in the UK but remotely from France. I will be receiving my salary and any bonus in Sterling. What is the best way to manage this once we live in France?

If you have regular payments in between the two countries there are different ways to structure these depending on your circumstances.

You could set a regular payment plan with a foreign exchange company like Moneycorp. The main advantage of this is to automate the payments and remove the hassle of organising a transaction every month. Moneycorp will collect the payment via direct debit and send it automatically to your bank account of choice in France.

Furthermore, if you are very rate sensitive or concerned about the impact that negative fluctuations can have on your income, you can decide to fix the rate on your regular payment plan for up to 24 months. This will give you the certainty of knowing how many euros you will receive every month.

Alternatively, you can manage your payments via our online platform, or get some guidance from our dealers on the best time to exchange the funds.

Do I need to have an offer accepted before opening an account with you?

No, there are no pre-requisites for opening an account. To utilise our services you can be at any stage of the process, start middle end, and after. In fact, the best time to open an account is before you travel to France to view potential properties. Getting familiar with the rates and your options ahead of time will help you setting up your budget and if you find a property you can use the guidance from your dealer to come up with an offer and plan the best way to pay the deposit and any further payments involved.  Not only this, but our services are completely free of charge and carry no obligation. So if you change your mind we can close the account with no hassle or cost.