Can you believe that for British property-buyers a €100,000 home in Europe is today around £7,000 cheaper than it was in July 2013? And the same goes for a $100,000 property in the USA… And this is all thanks to a shift in exchange rates – nevermind any discounts that might have been applied to a property.
Rewind almost exactly a year and the exchange rate took a nasty turn for British people. Against the euro, it was wavering around £1/€1.15, hitting £1/€1.14 at one point in July. While against the dollar, the value of the pound hovered in the low $1.50s, but dipped below as low as $1.48. You’ll no doubt be aware that the pound’s ongoing rise this year against both currencies means that today the two exchange rates are a solid £1/€1.26 and £1/$1.70.
Certainly, anyone who last year put off buying a property in Europe or the USA will be quietly celebrating the stronger pound, and why not? However, exchange rates can change quickly and unexpectedly, which is why anyone on the verge of purchasing an overseas home should consider not only how to get the best exchange rates for making foreign currency transfers, but also how they can protect themselves from movements in the rate during the purchase process.
One effective solution offered by Smart Currency Exchange is the forward contract, which effectively guarantees you a pre-agreed exchange rate for a future transaction – such as completing on your overseas property. All you need to do is agree the rate with your account manager and pay, typically, a 10 per cent deposit. In practice, a buyer could agree an exchange rate for the whole value of their property purchase, once they have had an offer accepted. Or they might agree an exchange rate for the value of half of the purchase price, preferring not to commit all of their funds, in case the rate swung back the other way.
Options for buying currency don’t stop there and Smart Currency Exchange will find a solution that best suits your requirements. To speak to their experienced currency team today, open a free, no-obligation account. It only takes minutes and can save you thousands!