Foreign Exchange Made Simple
Most people buying a holiday home abroad would prefer to do so without dealing
with the complicated world of foreign exchange. However, the sale price is
nearly always agreed in a foreign currency with the exchange rate fluctuating
constantly. Unfortunately nobody can predict these fluctuations making it
impossible for you to account for the cost of your property in your base
currency and maybe even pushing your overseas purchase out of reach!!
Example
A property costing €200,000 purchased on the 22nd of June 2005 would have cost
£133,333 however the same €200,000 purchased on 21st of July 2005 would have
cost £140,007. A huge increase of £6,674..
Rather than leave this hidden, but very real danger to chance, you may want to
contact a currency specialist, such as Sterling Exchange to receive the services
of a currency planner who will be able to explain and simplify the currency
purchase and transfer system.
Sterling Exchange offer a free service, including better rates of exchange, no
commissions and will often pay for the cost of your international transfer,
often costing up to £40 per transfer.
The two main products available through your currency planner are spot and
forward contracts. The simplest and cheapest form of currency exchange is the
Spot contract where a trade is agreed between you and your currency planner and
the currency exchanged within a few days. A Spot trade is generally used to
transfer your initial deposit and possibly the first stage payment on your new
property.
Once you have secured your purchase with a deposit, it is time to look forward
to your future payments. If you are buying a resale your next payment maybe up
to 30 days away, this can be a life time in terms of currency trading as the
example illustrates. If you are buying ‘off plan’ however, your payments maybe
spread over a period of up to 2 years. This can lead to sleepless nights as you
watch the price of your new home rise and fall, with no control over it.
The good news is your currency planner will be able to fix the price of your
property in sterling by fixing the rate, thus allowing you to budget for your
upcoming payments. This is known as a forward contract and is the safest and
cheapest way of dealing with your currency requirements.
You may decide that a combination of spot and forward contracts is best for you,
and your currency planner will be happy to help with the current rates and warn
of any future weaknesses in the market.
To contact a currency planner or for more information, please call Antonio
Michael at Sterling Exchange on 0044 (0)2073299977 or e mail antonio@sterlingexchange.co.uk
Please mention Spanish Costa Properties |
