The hidden risk of buying a property in a different currency

Buying a property in France can be an exciting venture. However if you are holding a currency different than Euro it is important that you identify the risk involved in the cost of your transaction right from the beginning.

France has long been amongst the most popular destinations for Brits looking to buy property overseas. As well as its convenient proximity to the UK, many are drawn by the warm climate, incredible alpine scenery, Mediterranean lifestyle, and the famously fantastic cuisine.

Perhaps you plan to retire to the Dordogne or maybe you dream of owning a holiday home in the South of France that you can escape to when the rain clouds gather in the UK. Whatever the reason for your move, it is important to be well informed and plan in advance to ensure you don’t end up incurring in additional and unexpected costs.

The exact amount you will pay in additional costs is dependent on a number of factors, such as the type and condition of your property, legal fees and country taxes. Shared maintenance fees for communal areas, air conditioning or heating installation and heating swimming pools are common examples of required expenditure overseas home owners overlook. Therefore, it’s important to understand which of these costs are relevant to you and ensure that they are taken into account – otherwise you could end up in financial difficulties.

However, this problem can be exacerbated if buyers calculate their budget based on the exchange rate when they bought their property. The foreign exchange market is constantly in flux, under the influence of various political and economic factors. So, while the rate may have been favourable when your offer was accepted in euros, adverse fluctuations can have a detrimental impact on your French property owning dream.

By using a currency specialist such as Moneycorp, you can manage these additional costs conveniently and cost-effectively. Moneycorp offer exchange rates which can be typically up to 3/4pc better than a bank. That could equate to a saving of up to £4000 on a £100,000 transfer – enough, perhaps, to make important renovations to your new home or cover unexpected taxes.

Plus, Moneycorp allows you to take advantage of a positive movement on a rate for your future payments either via a forward contract* or via a regular payment plan. That allows you to budget your costs but also to reduce expenses by protecting your payments from any drops or big changes on the rate of exchange.

This is very important in a market that can fluctuate substantially. In the last 12 months we have seen the GBP/EUR rate fall as low as 1.08 in September last year to better levels of nearly 1.20 a month later. If you are buying a property for €250,000 and holding pounds this could translate on a difference of £13,000 in the cost for that property.

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 or send them an enquiry. Plus with FrenchEntrée you are entitled to FREE transfer fees on all your currency payments.