With recent events weakening the Pound significantly, many are worried about what effect a weakening Pound may have on their plans to purchase abroad. In today's post we'll cover some examples of the ways in which we can protect you against the exchange rate dropping.
Buying property overseas - will the Pound drop further?
It's a huge concern for those buying a holiday home overseas. Many people go on viewing trips budgeting on what the exchange rate happens to be at that particular moment. This is a common error. For example, if you were looking at a €200,000.00 property in the middle of last month it would have cost you around £168,000.00. Today, that same property would cost you more than £10,000.00 more, just due to exchange rate fluctuations. It's even more important for those that have found their property and put a deposit down, only to find that when they come to complete it's no longer within their budget, meaning they have to pull out of the purchase.
In this scenario, a Forward contract is a wise consideration. This allows you to lock in the rate of exchange today for up to 2 years into the future, and you only lodge a 10% deposit to guarantee the rate. This allows you a fixed budget so that regardless which way the rate moves, you know what it's costing you in Pounds and you're protected against the rate dropping, which many are forecasting it will continue to do. You wouldn't by a house in the UK without knowing what it's going to cost you, and the same should hold true when buying overseas.
Selling a property abroad? You're in an enviable position
If you are selling abroad and need to convert a foreign currency back to Pounds, then you are in an enviable position. Since the referendum, a €300,000.00 property abroad is getting you £40,000 more today than before the vote. If you are still trying to sell your property, you can use this to your advantage. Because the rate has dropped by about 15%, you could reduce the price of your property by up to that amount in order to get a quicker sale, and regain it back on the exchange rate. Again, a Forward contract can be used to fix the rate now for up to 2 years, allowing you to take advantage of the favourable rate even if you haven't sold yet.
Find out more about getting the best exchgange rates
If you are buying or selling a property overseas and would like to find out more about the currency services we offer, and the ways in which we can help you, click here or complete the form below to send a free enquiry.
We can also provide you a free 'Buying Guide' for Italy, France, Spain and Portugal. These are invaluable if you're thinking of buying abroad, and cover everything from viewing, agents, budgeting, the legal process, surveys, mortgages taxes and more. Click here to get yours today.