Need to trans­fer money for a prop­erty pur­chase or other pur­pose? Dan Water­man an­swers some com­mon cur­rency ques­tions

French Property News - - Contents - Dan Water­man is the Gen­eral Man­ager of Ex­cel Cur­ren­cies UK Tel: 01322 221121 (UK) 0033 (0)9 75 12 82 76 (France) ex­cel­cur­ren­

How can a cur­rency spe­cial­ist help you move your money ef­f­i­cently?

Why use a cur­rency spe­cial­ist to trans­fer your money over­seas?

Well, in a few sim­ple words – to save money. When buy­ing a prop­erty in France, one of the most im­por­tant (but of­ten over­looked) con­sid­er­a­tions is how you will trans­fer your funds. Many buy­ers take what ap­pears as the ob­vi­ous op­tion to make the trans­fer: the high-street bank. From our own re­search, one in three peo­ple still don’t re­alise that there is an al­ter­na­tive to their bank for cur­rency ex­change. But be­ing at the mercy of poor ex­change rates, slow pay­ments and un­nec­es­sary charges is a thing of the past.

How can cur­rency spe­cial­ists pro­vide bet­ter rates than a bank?

It’s all they do. The only ser­vice a cur­rency com­pany pro­vides is cur­rency ex­change, whereas banks fo­cus their ef­forts in other and more lu­cra­tive mar­kets such as mort­gages, loans, in­surances etc. A bank will typ­i­cally set their ex­change rates in the morn­ing with a wide mar­gin to en­sure they al­ways make a profit, no mat­ter the fluc­tu­a­tions dur­ing any given day. In con­trast, a cur­rency spe­cial­ist will use live rates and there­fore work on much smaller mar­gins with the client. Whether the ini­tial trans­fer is a large lump sum or on­go­ing trans­fers such as mort­gage pay­ments, liv­ing costs, pen­sions etc, the com­mon re­sult is the same: you are guar­an­teed to save money us­ing a cur­rency spe­cial­ist over your bank.

Is it safe and are there any fees?

Yes, 100% safe and se­cure. The rea­son for this is that cur­rency spe­cial­ists are reg­u­lated by the Fi­nan­cial Con­duct Au­thor­ity (FCA), pri­mar­ily to oversee that when you trans­fer your funds through a cur­rency spe­cial­ist, your money is held in a seg­re­gated client hold­ing ac­count.

Ul­ti­mately, this means that all your funds (re­gard­less of the amount), will be pro­tected un­til they reach your ben­e­fi­ciary bank ac­count. This pro­tec­tion should not be con­fused with your bank’s FSCS com­pen­sa­tion scheme, as that only pro­tects up to £85,000 of your money.

At what point should I set up an ac­count?

As soon as you have de­cided that you will be buy­ing a prop­erty abroad. Once you open your free ac­count, you have ac­cess to the ex­pert knowl­edge of your per­sonal ac­count man­ager, as well as the nu­mer­ous re­sources and tools that can help you plan your trans­fer at the best time, min­imis­ing your risk and max­imis­ing your funds.

It is worth not­ing that if you open an ac­count and never use it, you won’t be charged as you are un­der no obli­ga­tion to trade. Also, some com­pa­nies run com­pe­ti­tions and of­fer new cus­tomer sign-up bonuses from time to time, so keep an eye out for these fun in­cen­tives.

What are trans­par­ent ex­change rates?

This term has a dif­fer­ent mean­ing de­pend­ing on which cur­rency com­pany you are speak­ing to. For some it will mean they will tell you the rate be­fore you buy. Others, how­ever, will display the rate on of­fer and the rate they buy at, al­low­ing you to see what they profit as a com­pany. The lat­ter can build clients’ trust and puts your mind at ease know­ing you have achieved a fair ex­change rate.

How can I se­cure my rate with a for­ward con­tract?

A cur­rency spe­cial­ist of­fers prod­ucts and tools to help pro­tect your money from ex­change rate fluc­tu­a­tions. One of the most pop­u­lar is called a ‘for­ward con­tract’. This is a ‘buy now, pay later’ prod­uct, whereby with a small de­posit you can lock in an ex­change rate for a date in the fu­ture. This prod­uct is great if you do not want to use all your dis­pos­able in­come or if you just don’t have the full amount read­ily avail­able yet. Ul­ti­mately, this will al­low you to plan your bud­get, know­ing ex­actly how much you will be spend­ing and re­ceiv­ing in both cur­ren­cies.

For ex­am­ple, let’s say that you know that you will be buy­ing a prop­erty within a four-month pe­riod and that you have £250,000 as your bud­get. At its high­est point in April 2017, the ex­change rate was 1.1955, there­fore a bud­get of €298,875.

You find a house and make an of­fer; it can take as lit­tle as four weeks, but up to four months to com­plete the pur­chase. Let’s say it takes four months, and the ex­change rate is now 1.0955 (mid-au­gust 2017) – mean­ing your £250,000 is now worth €273,875. A drop of €25,000, which could make your pur­chase un­af­ford­able. This type of loss is one of the many rea­sons why cus­tomers choose to use a cur­rency spe­cial­ist.

What’s an E-wal­let?

Some cur­rency ex­perts have an on­line plat­form that will give you an ac­count with a built-in E-wal­let fea­ture. The E-wal­let al­lows you to hold mul­ti­ple cur­ren­cies all at the same time, which is ideal if you have not opened a for­eign bank ac­count yet.

If the ex­change rate isn’t favourable be­fore you pur­chase your prop­erty, you can still de­posit your funds in GBP and leave it there un­til the ex­change rate im­proves.

On the other hand, if the rate is favourable, you can pur­chase your eu­ros now and leave the bal­ance in your euro E-wal­let ac­count un­til you are ready to com­plete your pur­chase. This type of ac­count is not avail­able at high-street banks.

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