Many of our clients buy abroad to enjoy their retirement or make the most of a UK income with a beautiful home in a fantastic area, all more affordable than back home. However, the purchase is just the first step. If you rely on a British income and you don’t plan ahead, the value of that money will change unpredictably every month.
How your income can change value every month
You might well have a fixed income in pounds – for example, £1,500 in pension income that’s being paid into a UK bank account, or a rental income from a UK property.
However, that income will constantly change value in euros or dollars. Here’s what your £1,500 income would have got you over the past year:
As you can see, there’s not a single month where the income stays the same – which means that when you’re working out how much you’ll have left after bills, any mortgage payments, food and so on, or just trying to budget in advance for some redecorating later on in the year, or a trip back home, you really have absolutely no idea. And that is why so many of our clients choose to spend a few moments securing their budget with us at the start of the year, so that they can budget for the next twelve months, and then readjust again the next year.
What are your options?
First off is a forward contract. If you’ve already bought or are planning to buy a property, you’ll probably be familiar with these. They’re essentially a simple way for you to lock in a fixed exchange rate for up to twelve months. For example, if you had locked in the GBP-EUR rate in May, your £1,500 would be coming into your euro bank account as €1,755 every month, even when the markets dropped in August.
It’s easy to do: simply call your Personal Trader on 020 7898 0541 to tell them how much you’d be looking at transferring during the fixed period and to talk through your options. Once agreed, you’ll pay a 10% deposit and it becomes a legal contract, with your money fully protected.
You can also use a forward contract in conjunction with one of our regular payment plans (RPP). If you’re making the same payment each month, as you would likely be in this situation and with a forward contract, then you can set up an automated transfer process for a set day at the exchange rate you have already locked in. That way, you don’t even need to call your trader each month, as your money will be transferred automatically. That said, your Personal Trader will still always be at the end of the phone should you have any questions or queries.
As Smart customer Sandra Harris, who bought a flat in sunny Playa Flamenca, told us when we spoke to her last year, ‘I’ve done two lump sums with Smart where I locked into the same exchange rate with a forward contract and it all went through on the same amount of euros, so I knew exactly how much I was paying. With the banks…you have absolutely no currency control.’ Many of our clients do likewise for small amounts, too, such as Janet Lowe, who told us, ‘My neighbour said I should use Smart for sending my money. I thought, “They won’t be interested in my amounts, just to pay bills and so on – it’ll only be for very big sums like buying a house.” She said it wasn’t the case, so I did try it out and it worked really well!’
To give yourself the certainty of a fixed budget like Sandra and Janet, speak to your Personal Trader on 020 7898 0541 today about a forward contract. And if you know anyone who would benefit from the same service to protect their budget from the risk of the live markets, don’t hesitate to refer them to us – you will help them and also earn yourself Smart Rewards as soon as they trade.