Ten things you need to know about exchanging foreign currency when buying ...



Source: Keith Spitalnick, Currencies Direct Spain


10 things you need to know when transferring your money to buy a property
When purchasing your property abroad you will need to pay for it in the foreign currency of that country e.g. for Spain this will be in euros. Your traditional high street bank may seem the obvious choice for where you change your savings, due to ease and tradition, but they are likely offer you the tourist rate on the exchange of your hard earned cash, as opposed to the Commercial Rate that a specialised foreign exchange company will offer.

By using a foreign exchange company the rates will be more favourable so you can get more for your money. You will probably find a foreign exchange company will offer a rate about 2 to 3 points better than your high street bank.
For example:
Bank rate of 1.08 Euros to the Pound 
Foreign exchange company rate of 1.11 Euros to the Pound
In this case, if you were transferring £100,000 the currency broker will give you 3,000 Euros more for your money.

Transfer costs
Your High Street Bank may well hit you for between £25 to £40 for making a transfer to get the funds to a bank account in Spain. A foreign exchange company will normally be able to waive these fees for you.

Receiving Fees
The big one to look out for is the receiving fees of the bank in Spain.  Many Spanish banks will charge a fee for accepting your money and we have heard of instances of this being as much as 1%, however most currency brokers have agreements in place with some or all Spanish banks to waive this fee. 

Whoever you are using to make the transfer, you will first have to be registered with them (to comply with Anti-Money Laundering Legislation). This will usually only take a few minutes and only needs to be done once.

Due to the currency market exchange rates constantly changing, they can vary from one day to the next.  However, there are various options available from foreign exchange companies to help customers get a great rate which High Street Banks usually will not provide:

Spot Transactions
Buy now, pay now. These are ideal for anyone who needs their currency straight away as the currency is purchased today at the current rate. However, if you have time to spare before your payments are due it may be wiser to consider a Forward Transaction.

Forward Transactions
Buy now, pay later. These allow you to secure a rate for up to 12 months in advance to protect yourself against any movements in the market. A small deposit holds the rate until the balance becomes due when the currency contract matures. This option not only protects against possible drops in the exchange rate but also gives you the security of the currency you need at a guaranteed cost, regardless of fluctuations in the market.

Limit Orders
Allow you to place an order in the market for a desired exchange rate. This has the advantage of protecting you against negative exchange movements whilst still allowing you to gain from a positive movement. Your request is entered into the system and an automatic currency purchase is triggered once the market hits your specified rate.
Using the options above clients can save thousands of pounds on their currency transfers what better way to kick start your life abroad?

Regular Payments
Once you have become the owner of your dream property, it is highly likely that you will need to send regular monthly payments from home whether for mortgage payments, maintenance expenditure or transferring pensions or salary. Using a reputable foreign exchange company can make this process hassle free and they are likely to offer you better terms than your high street bank. By setting up regular monthly direct debit payments you can benefit from extremely competitive rates without the bank charges or the monthly worry.




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