Europe is slowly coming out of lockdown and property sales are on the up. But with so much uncertainty on the currency markets, how can you make sure you’re not going to lose out when you buy or sell?
Is buying during the current climate risky?
To put it frankly, buying internationally is always risky, if you don’t plan ahead. In essence, you are agreeing to a fixed price in euros (or dollars, or whatever it may be) but paying for it in pounds. How much the final price is doesn’t change in euros, but it changes constantly in pounds as the exchange markets move. The exchange markets are extremely volatile at the moment, with pressure from the Covid-19 pandemic and the end of the Brexit transition period on 31st December. As we explained in our article tracking the price of a €100,000 house over the last year, that €100,000 could have cost you anything from £83,000 to £94,000 in the space of a month.
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How can you buy abroad safely?
As complex as the exchange markets are, however, there are simple ways for property buyers to purchase their dream home abroad safely – without the risk of losing money through no fault of your own.
For most of our clients, the solution is a forward contract. Essentially, it means that you lock in the same exchange rate for up to twelve months, so any drop in the rates does not affect you. Here is how it works, in four simple steps:
1. Discuss your requirements with your Personal Trader
When you open an account with Smart Currency, you will benefit from your own named Personal Trader, who does not work on commission. He or she will guide you on the best solutions for your situation.
2. Agree to the quote
You will then confirm with your trader the total amount of money that you intend to transfer over the set period (eg 12 months). They will quote you the rate so that you know what you will be getting. Once you agree to this, you have the security of knowing that this rate will be unchanged throughout the whole period.
3. Pay a deposit
You will pay a deposit of the total amount, usually around 10%. Your trader will then purchase that total sum of money in the desired currency on your behalf. The money is held in a secure, segregated client account.
4. You transfer your money as and when needed
You are then free to make your transactions as and when you need throughout the year (or period you’ve agreed to) at that rate that you’ve fixed. You will have received instructions on how to make a transfer when you first agreed to the contract, and your Personal Trader is on hand to help answer any questions by phone or email.
It’s as simple as that to protect yourself from losing thousands on the currency markets by just sending on the day through your bank. Speak to your Personal Trader today on 020 7898 0541 or, if you’re not yet registered, open an account today.