Keep the Change; Using a Foreign Exchange Broker When Buying Abroad Could Save You Thousands
BUYING a house abroad is not always a smooth process. It is all too easy to be lured by affordable property markets and a supposedly improved quality of life. The reality can be different.
However, thanks to a growing number of foreign exchange companies, overseas property buyers can now benefit from favourable exchange rates and reliable money-transfer services that many banks lack.
These currency brokers - which make their money in the exchange rate spread - offer competitive exchange rates owing to the large volume of daily transactions they carry out.
Savings can be between 0.5 per cent and 3 per cent of the amount being transferred.
Giles Smallwood, private client manager at currency broker World First, says UK banks often give the same rate of exchange for transferring [pounds sterling]100,000 as they would for small amounts of holiday cash. "We consistently get clients the most competitive rates of exchange and therefore earn them more currency for their sterling," says Smallwood. "On [pounds sterling]100,000 the savings compared to UK banks can be as much as [pounds sterling]2,000 or more." On top of commission, banks can also charge hefty transfer fees.
Another advantage of using a currency broker is a more personalised service.
They keep clients updated with exchange-rate movements - a service that high-street banks do not offer. Clients can set a best and worst "target rate" throughout their property purchase, enabling them to transfer at a preferential rate, depending on how it fluctuates.They also have an option to "forward buy" currency at an agreed rate for a future date, which is then secured, regardless of market-movements thereafter. To transfer money, buyers complete a registration process and, once inward funds are received, the outward currency payment goes out the same day.
Clients can transfer funds back to the UK should their new life abroad not live up to expectations. Buyers should ensure foreign exchange companies are regulated by HM Revenue & Customs and registered at Companies House. Credit ratings, accounts and collateral levels can all be checked.
Freddy Rueda, whose company Fr e ddy Rueda Sarl sells properties in the Languedoc area of France, believes recommending a foreign exchange broker is a useful estate-agency service. "All my clients are happy with the service they received and the savings they made," he says.
Peter Rowe, a black-cab driver from the Isle of Dogs, bought a two-bedroom holiday home in the Vendee region of France. Rowe knew nothing about foreign exchange and was referred to Moneycorp by his bank.
"We got a mortgage through Abbey National in France, but then they sold off their French branch and were not willing to transfer my funds to euros, plus they would have charged me," he says.
Transferring [pounds sterling]600 a month through Moneycorp's Regular Payment Plan saves Rowe up to [pounds sterling]660 a year.
People who rent abroad can also reap the benefits. …