How to manage your costs when buying a property
How to manage your costs when buying a property
When buying or selling a property, the price initially quoted or, more importantly, the price you are basing your calculations on can change dramatically depending upon the exchange rate at the time of completion which is often in 3-6 months’ time.
Neil Poyton, Head of Private Dealing at Spartan FX, shares his insights:
“The current exchange rate often plays a big part in a customer’s decision to proceed with the sale or purchase of a property. The reality is that the exchange rate is usually very different from when they made their original decision.
Being able to secure the exchange rate at the beginning of the process gives our customers peace of mind, they know up front how much the property will cost, or how much they can expect to receive."
Rate movements can be underestimated, while getting the best rate on the day is important, buying your currency at the right time can be even more crucial.
For example, between January 2021 and October 2021, there was a 3% rate movement on EUR/USD. For customers selling US Dollars and buying Euros, it would have been cheaper to buy at the beginning of the year.
As you can see, even on smaller transfers, rate movements can still make a difference to the price you will end up paying.
01/01/2021 12/10/2021
USD EUR USD EUR Difference
$22,428 €20,000 €23,100 20,000 $672
$560,700 €500,000 €577,550 500,000 $16,850
$1,121,400 €1,000,000 €1,155,000 1,000,000 $33,600
(Rates based on 1.1214 1st January 2021 and 1.1550 12th October 2021).
What are my options?
If you have all the money available now
1. Buy it now; we can hold your money on account, or you can transfer your money to your Portuguese bank account or to a 3rd party, for example, a lawyer.
2. Spartan FX can pro-actively monitor the market for a specific exchange rate. Once your desired exchange rate is achieved, we can notify you or automatically buy the currency on your behalf.
If you do not have all the money available now
1. We can fix the rate for a future payment. A 10% deposit is needed upfront; this is not a cost or a charge. The total amount is transferred when the remaining 90% is paid.
Fixing the rate (Forward Contract)
Locking into the exchange rate in advance of your purchase is a perfect way to control your budget and potentially lock into a favourable exchange rate.
It is worth bearing in mind that you are locked into the exchange rate regardless of any positive or negative rate moments. However, it is an ideal budgeting tool and useful if you do not have all the funds available and you can fix the rate up to 12 months.
What to use a forward contract for:
• Property purchase.
• Property sale (if you have 10% available in advance).
• Any future payments over £10,000.
Expert Tips
• It is never too early to start thinking about the exchange rate.
• Don’t leave it to the last minute, the more time you have, the more options you will have available to you.
• Have an honest conversation with your personal dealer. We are here to help and the more we know about your situation, the better the service we can provide.
If you are looking for a specific exchange rate, a speedy transfer or you need help monitoring the exchange rate, our dealers have the experience to understand your requirement and meet your needs.
Speak to an expert today! Call Spartan FX on 0203 984 0450 or email personal@spartanfx.co.uk
Why use Spartan FX?
• Competitive exchanges rates
• Personal one-to-one support for all your currency needs
• No transfer fees
• Fast and secure online transfers
• Award-winning service
Posted by Spartan FX Official Currency Partner to KipperTree