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More people than ever before have been taking advantage of a strong
pound and comparatively cheaper property prices abroad. If you are
considering the purchase of an overseas property, either as an
investment or as a second home, it is important you become familiar with
a very volatile exchange market.
Where can I obtain the best exchange rate when I need to Buy Euros?
Establish from the outset approximately how much currency you need to
buy and the timescales you have, e.g., an initial deposit and then
regular stage payments or a balance on completion. You then need to
compare like for like the Euro exchange rate you can obtain from your bank to
what a broker can offer you.
Where do I find a reputable currency broker?
Ask the agent you are buying the property through to make a
recommendation or carry out some research on the Internet.
Are there risks involved when buying Euros?
There is clearly potential for your property to cost more than expected
if the currency markets move against you. When buying in Europe you will
be provided a price for the property in Euros. It is therefore important
that you establish a relationship with a broker who is able to provide
you with expert advice and the best financial tools to use for buying
your Euros.
How can I buy Euros for a date in the future?
You can buy Euros for a future date using a 'forward contract'. This
effectively means you can take advantage of a good exchange rate from
the market without making full financial commitment. The rate can be
guaranteed with usually a 10% deposit. This is a great option if you
want to fix your costs early on, so you know exactly how much the
property will cost you.
What can a currency broker offer me that can not be provided by my bank?
First and foremost currency brokers offer better Euro exchange rates and
lower transfer charges. On top of that they offer a much more specialist
and personal service with an understanding of the complex and sometimes
stressful foreign property purchasing process.
Does it take longer to buy through a broker than a bank?
No. Generally as brokers are experienced working within the foreign
property market they understand the importance of payments reaching
their destination on time. Therefore as soon as funds reach a client
account they are automatically sent by international transfer known as
SWIFT.
Are there different types of exchange rates?
Yes, there are three.
Market rates are what banks and brokers use to buy Euros which are often
displayed in newspapers and on websites. Wholesale rates are those
provided to clients who are buying a large sum of currency for a
property purchase or emigration. The weakest rates known as tourist or
retail would be those offered at a bureau de change or post office.
Is it important I obtain a wholesale rate?
Yes, very important; it is always beneficial to look beyond your bank
and get a preferable exchange rate by shopping around.
'It is unlikely that you would purchase a property in the UK without
agreeing a definitive price first! - Why do it with a foreign property?
To avoid taking risks in an uncertain market why not secure a good rate
today by buying euros without full financial commitment, have you
considered our risk management services, allowing you to lock in
impeccable exchange rates for up to 2 years ahead requiring only a 10%?
Archive news from Monday 2ed August 2004
Friday afternoon going into the weekend has seen sterling regain
strength over the Euro to reach a high this morning of 1.5160 to a
current rate of 1.5053. Sterling had lost considerable strength against
the Euro last Thursday but has managed to pull back it’s gain as dealers
keep an eye on this week’s data for the prospects of any monetary
tightening after this month.
All eyes are on Thursday’s MPC announcement at the BoE wich Ian Stannard,
currency strategist at BNP Paribas stating ‘just about everybody is
going for a rate hike this week so I don’t think sterling will get any
additional support from a rate hike. That appears to be fully priced
into the market’
This therefore highlights that although we will see a rate rise on
Thursday it is unlikely that sterling will gain any major strength
against the Euro as it has been so widely expected and therefore the
market has accounted for this occurring.
The outlook is less clear after last Thursday’s consumer credit data
raised concern that current house prices, frequently commented by BoE
officials, could prove unsustainable so are a constant weight on the
future decisions and the state of the economy.
In this uncertainty it is a fair conclusion to make that the current
strong performance of sterling could be short-lived and making a
decision to buy Euros now could well be a fruitful choice, especially
for people buying property or emigrating to Europe.
Steps you need to take when Buying Euros Written by Toby Fischer
