|
Currency Advice
When buying in Spain you will need to know the price in euros. Let’s face it getting competitive exchange rates and good service from your bank can be pretty difficult.
We recommend Currencies Direct. Contact them using the details below quoting reference number: R-982-FCFA.
Buying a property abroad, especially in Spain, is becoming an increasing British affair, as more and more of us are looking for that idyllic retreat on foreign shores. Although a dream for many, property buying can turn a dream into a nightmare if vital parts of the buying process are neglected. One major cause of the stresses overseas home buyers face is the common error or overlooking the importance of the foreign exchange rate. Specialist foreign exchange provider, Currencies Direct, explains how to avoid the risk and get a good deal on your foreign currency transfers.
Why is the foreign exchange rate so important?
Whether you are buying a property outright or in instalments, the purchase will no doubt involve changing your hard earned cash into a foreign currency. Unfortunately, no one can predict the exchange rate as many economic and political factors constantly affect the strength of the pound. Exchange rates are constantly moving and there is no guarantee that they will fall in your favour. It is vital that you protect yourself against these movements, as a lack of proper forward planning could potentially lose you thousands of pounds and reduce your spending power abroad.
For example:
In the five months, from January to May this year, the euro has been as high as 1.5279 and as low as 1.4096, so for example if you were buying a property worth €200,000, the cost could be £130,898 or £141,884, a difference of £11,000 depending on when you purchase the currency. This is the cost of a small family car!
We would never dream of buying a house in the UK without knowing how much we were going to finally pay. In the same way, by buying and fixing a rate for your currency ahead of time you will know exactly how much you will end up paying for your home abroad. It is, however, fair to admit that many of us do not have the time or sufficient knowledge of the financial tools available to us to be in a position where we can confidently gauge when the foreign currency rates are at their most favourable.
Currency contracts
Spot Transactions
This is the Buy now, Pay now option and is ideal for those whose capital is readily available to them and who need to act swiftly.
Forward Transactions
This is the Buy now, Pay later option and is ideal if you still have some time to wait before your money is due overseas or if you are waiting for the proceeds from the sale of your UK property. A small deposit will secure you a rate for up to 18 months in advance giving you the security of having the currency you need at a guaranteed cost. In the above example this option would have protected the price of your house when the pound fell against the euro.
Limit Orders
Limit orders enable you to place an order with your dealer for your desired rate. Your dealer will keep an eye on market movements and if your desired rate is reached will contact you to arrange the purchase.
Regular Currency Transfers
Once you have become the owner of your dream property, it is highly likely that you will need to send regular monthly payments from home whether for mortgage payments, maintenance expenditure or transferring pensions or salary. Using a reputable foreign exchange company can make this process hassle free and they are likely to offer you better terms than your high street bank. By setting up regular monthly direct debit payments you can benefit from extremely competitive rates without the monthly worry.
Arranging your mortgage
You have a choice of taking out a euro or sterling mortgage and there are pros and cons for both. With a euro mortgage, the interest rate is currently much lower than the UK’s. However by taking out a euro mortgage you are exposed to currency fluctuations. A sterling mortgage allows you to budget accurately as you will always know the sterling amount each month and regular mortgage payments can be transferred at very competitive rates. It’s worth weighing up the options and talking to a qualified mortgage advisor when making your decision.
For further information contact Currencies Direct on:
Puerto Banus, Costa del Sol: +34 902 310 444
Torrevieja, Costa Blanc: +34 965 707 971
London: +44 0 7813 0332
Visit their website at www.currenciesdirect.com for more information.
|
|
 |
