Regular readers will know that we often bang the drum for forward contracts here at Smart Currency. That’s not a coincidence. They’re our most popular service as they are a great way to protect your hard-earned money from being exposed to the market’s fluctuations.
If you’re buying a property overseas, the last thing you want is to see your budget eroded by a set of unpredictable variables. In this article, we’ll show you how a forward contract can help you to maintain control of your finances, whatever you’re up against.
What is a forward contract?
A Forward Contract is a legal agreement to buy a certain amount of currency using today’s rate at an agreed date up to 12 months in the future. This means that if you’re looking to buy a property overseas, or transfer money abroad, a forward contract will provide the peace of mind of knowing the exact rate you’ll pay.
With a forward contract, you can take control of your international payments by protecting an exchange rate from adverse currency fluctuations, common in times of economic uncertainty.
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How much money could I save?
Let’s look at a recent case study. Jason and Kylie decided to buy a small villa on the Costa Blanca with a budget of €300,000. After a few months of searching, they find their ideal home and after securing it, they agree to pay a 10% deposit, leaving the amount they left to pay £254,972 (an increase of £4,109 from when they started looking). When they go to transfer the remaining money three months later, the exchange rate has changed, meaning the same €270,000 now costs £263,277 – over £8,000 more than a few short months prior.
The shocks of Brexit, Covid-19 and the “mini” budget are all recent examples of wild swings in the value of the pound. Had you bought a property without a forward contract at those times, you would have had to reach much further into your wallet than may have been comfortable.
Why book a forward contract with us?
Fluctuations to currency markets are normal but can give savers a nasty shock when it comes time to transfer money. Luckily, Smart Currency’s forward contracts can help you avoid any uncertainty. By guaranteeing a specified rate, you can rest easy in the knowledge that any adverse scenario will have zero impact on the amount you pay.
Our team are always happy to assist you, whatever your individual needs. Whether you need to make regular payments or have a lump sum to send on a specific date, our experienced team are always happy to help.
How do I start the process?
If you’d like to protect your money with a forward contract or are just curious to know more, give your trader a call or if you’re new to Smart Currency, simply enquire here. You can also request a callback if you’d feel more comfortable talking to one of our traders.
There’s no obligation to make a trade, or even to add money into your account right away. Once you’re further along with your property buying journey, we’ll have the account ready and waiting for you, as well as a dedicated trader who’ll be on hand to offer any guidance needed.
To learn more about forward contracts, as well as the many currency strategies we offer, a good place to start is by downloading The Property Buyer’s Guide to Currency. Or if you’d like to speak to a member of our team, don’t hesitate to give us a call on 0808 163 0102.
