With currency, as the weather, be prepared for a sudden change in the climactic conditions!
At the time of writing much of England is blanketed in snow and there is a blizzard, literally, outside the Smart Currency Exchange offices. Yet today is the first day of spring. Soon the clocks will go forward and before we know we’ll be complaining that it’s “too hot”.
When you’re in a blizzard, it requires a feat of the imagination to picture days of hot weather just weeks away. It takes the same mental effort to imagine what might happen to your money if the exchange rate moves against you.
You might need to find tens of thousands of pounds extra to meet obligations made when the exchange rate weather was very different.
Working through those possibilities, however, is critical at this time of year. If recent history is anything to go by, springtime tends to see the pound moving more than usual.
This is also the time of year when many of us start to plan a property move. Plenty of our clients will be attending property shows or planning viewing trips (Smart will be at Your Overseas Home, by the way, click here to apply for tickets). Those who have already bought abroad might be planning other property related expenditure. Perhaps your pool needs a makeover? Maybe it’s time to build a separate annex for when the noisy (but delightful) grandchildren come over! Is it time to remodel the garden?
Some of our clients will be planning a property sale overseas, and are frantically sprucing up their property for buyers. Others will be marketing their holiday home for spring and summer rentals, working out how much money they might make as Brits rush for the sun.
If you are in the middle of one of these transactions – a house purchase, sale, or building work – and the value of the pound moves against you, the effect on your budget can be disastrous. You might need to find tens of thousands of pounds extra to meet obligations made when the exchange rate weather was very different.
That is why we urge all of our clients, this spring, to talk to us about their currency strategy. For a property purchase that can take months, it will be wise to lock in an exchange rate via a forward contract. This fixes the rate on the day you make the contract and pay a deposit for the whole year ahead. Alternatively, you could take the exchange rate on the day with a spot contract.
If you’re making regular payments for building work or bringing rental income home, a regular payments plan will be your new best friend.
Whatever you choose, Smart is here to help you. Give us a call today.