The benefits of a lawyer are obvious. But why use a currency dealer? The Global Property Group put the questions to currency dealer, Moneycorp, on your behalf.
Why should I bother with a currency dealer?
Exchange rates fluctuate by the second and it may be that the very best deal is available well before you need to pay for your property. If this happens, there are ways to benefit from the deal without having to pay early.
For example, between April 2, 2002 and Jun 24, 2002, the Euro strengthened from €1.6369 to €1.5382 against Sterling. People fixing the rate in April, for payment in June would subsequently have saved over £7,800 on a €200,000 property. Such currency swings are quite common.
So If I like the rate today but am not paying for my villa for another six months, what should I do?
In this scenario, the rate can be fixed on a forward contract, ensuring you get the rate that suits you. A forward rate is easily arranged through your personal dealer. Only a small deposit is required to fix this rate and you can then rest assured that you will then be protected from any adverse movements.
I know nothing about currencies. Who can explain it all to me?
High street banks are really not geared up to provide this kind of assistance, as it is not their specialist area. On the other hand, Moneycorp staff are experts in the currency markets and will spend their time monitoring the markets and providing customers with information and options to make the best investment.
Will I get the exchange rate on the board at my bank, or can I do better?
In almost all circumstances, a specialist currency dealer's exchange rate will be better than the equivalent rate from a bank, and certainly a great deal better than the tourist rates on the board in your local branch.
We achieve this by dealing high volumes of currency in the international money markets and then working on far lower profit margins than the high street banks, so renowned for their ‘exceptionally healthy’ profit announcements.
What difference could the exchange rate have on my property purchase?
As an example, the Sterling – Euro exchange rate has moved up and down between €1.5279 and €1.4066 in 2004. On a €300,000 property, this equates to a potential loss of £16,900. Getting it wrong or leaving it to chance can be very costly.
Can I protect myself against a falling exchange rate?
You can, either through buying a forward contract or through the use of market orders. These are safety net style instructions placed in the market through a specialist broker. The market order guarantees a minimum exchange rate but allows you to take advantage by buying at a better rate if the market is favourable. This sounds more complicated than it is. We can help you understand it in two minutes.
I’m being asked for stage payments. Is there a way to guarantee the exchange rate for these future payments?
Again, forward contracts or market orders are the safest bet to make sure you don’t lose out.
What do specialist brokers do that is different from my bank?
In a word, understand. There are endless ways to use the exchange rate fluctuations to your advantage but perhaps only a handful of ways that will suit your particular circumstances. All Moneycorp dealers are fully qualified to understand your needs and suggest the most appropriate course of action to save you time and money. And if you don’t agree, you are under no obligation to trade at any time.
Is it very complicated to use a specialist broker?
We hope that we have made the process of using our services as simple as possible. Obviously, the reason for coming to a currency dealer is to improve upon what is available to you elsewhere and that may be slightly more involving. However, the cash and peace of mind advantages outweigh a few extra minutes on the telephone.
Is my money safe if I use a specialist broker?
Yes, as long as you use the right broker.
If you would like Moneycorp to contact you with further information please click here.
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Foreign Currency Exchange Rates Table
1. What is the most cost effective way to transfer my money abroad?
When paying for your property, you will have to convert your hard earned pounds into a foreign currency. The price that this costs you will vary constantly, often by the second, and thus the timing of your purchase, and the rate of exchange achieved, is important. The different rates of exchange available from banks and foreign exchange dealers, coupled with this timing, can make a major difference to the total cost of the property.
2. How do I get the best rate of exchange or suggestion on transaction timing?
Sometimes you do not have any time to wait for an exchange rate movement in your favour, as deposits etc need to be paid on time so the only way to save money is to get a favourable rate of exchange. There are a number of rates of exchange that are available, from tourist rates up to a commercial rate, depending on where you buy the currency. Reputable currency providers will regularly provide a more favourable rate than a bank and are certainly worth making a comparison.
Transaction timing is a question of suggestion, as no one knows ‘exactly’ what the rate of exchange will do, so if you do not know – ask!
3. Will I get charged in the UK and abroad when I transfer my money?
This is variable and worth exploring, for example, whenever you transfer money to Spain you will inevitably be charged a 'lifting or receiving fee' by the Spanish receiving, and or clearing, bank. This can be anything from 0.1 - 0.5% of the amount that you transfer over, even it is going from your own UK account to your own Spanish account. This is normally not included in a standard bank charge although most reputable foreign exchange dealers will ensure that it is not charged to you.
4. How do I know what the exchange rate will be when I send money over in 3 months time?
You don't! It is, however, possible to secure an exchange rate now for future delivery in up to 18 months time, for ‘staged payments’ for example. This is called fixing a 'forward contract' and will require a deposit to guarantee the rate. This will not only secure you an exchange rate but also fix the cost of your property in pounds sterling, even if your payments aren't due for another few months.
5. How long does it take to transfer money abroad and at what will be the cost?
The time it takes to move money is in the hands of the banks both in the UK and abroad but will normally take 2 – 3 days but can take up to 10 days in extreme situations and it will cost £15 per transaction.
Please see for more information or with any questions.
Information provided by Mr Ian Hancock of TTT Moneycorp Commercial Foreign Exchange Dealers 0207 589 3000
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