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Currency Trends
Currency trends and exchange rates can have a significant impact on what you pay for your investment property - for currency advice or details on the Company who we recommend contact Andrew Bartlett.
Exchanging Your Pounds For Dollars
If you are buying a property in the USA, whether as an investment, holiday or retirement home, or to live in permanently, you will have to pay for your property in US Dollars.
Exchange rate volatility will inevitably play a key role in your property purchase. It is not uncommon for currencies to fluctuate by as much as 10% over relatively short periods of time.
For example, a couple wishing to purchase a property in Florida for $200,000 could have paid the Sterling equivalent of £104,096 in April . Three months later they would have paid £115,134 for the same property. By securing an exchange rate in advance, they would have made a saving of almost £11,000.
• More competitive exchange rates available, saving you money.
• Fixed exchange rates for settlement in the future, protecting you from adverse currency movements and allowing you to lock in to favourable exchange rates.
• Fast and seamless international money transfers.
• Friendly, expert staff to guide you.
• No commission charges.
Below are some common questions about exchanging your currency.
Where should I buy currency?
You can obviously walk into any high street bank or bureau de change and exchange your currency for Dollars. This may be convenient for your holidays but for larger amounts of currency it pays to get in touch with a specialist foreign exchange dealer. Specialist brokers will almost always offer much more competitive rates than high street banks or tourist outlets, as they deal exclusively in high-volume transactions and their overheads are much lower.
What will it cost me?
Currency brokers do not charge a commission fee as they make a margin on your money from the high-volume rates they obtain in the money markets In general the more money you wish to convert the better the rate. Depending on your bank or broker, there will be a cost to transfer funds of between £15 and £40 per transaction. It's a good idea to compare the total cost of a currency trade as some currency dealers do not charge a transfer fee but more than make up for this difference in the exchange rate that they quote.
What information do I need to provide in order to make an exchange?
You can set up a trading facility free of charge and without obligation. Simply fax or post your completed application form to your currency dealer along with copies of two forms of identification e.g. a copy of your passport plus a recent utility bill or bank statement. Your account is normally opened the same working day.
If I take out an Overseas Mortgage and have to make payments from the UK how can I do this?
Foreign Exchange Dealers can provide a Regular Payment Plan to assist those clients that need to make regular overseas payments. Such payments might include overseas mortgage payments or transfers of UK pension payments or any other regular transfers. The Regular Payment Plan allows you to fix an exchange rate on regular overseas payments for a period of between 6 and 24 months, removing the worry caused by fluctuations in the exchange rate over that period of time. They will deduct the payments from your account by Direct Debit each month and transfer directly to the destination account of your nomination.
How do I purchase currency?
Provided you have set up your trading facility with the broker or bank you will be able to buy currency over the telephone. This usually takes the form of a binding verbal agreement to buy currency at the quoted rate.
Can I hold out for a particular rate?
Yes, you can instruct the broker to contact you the moment the rates change to your desired level. Some brokers, can place an order to purchase currency outside London trading hours, which will automatically trigger as soon as your desired rate is achieved. Just make sure you are being realistic about the rate you are looking for and be prepared to wait!
What if the rate is good now, but I don't need to make payment for 3 months?
You can fix an exchange rate for up to two years to make it easier to plan the cost of your currency payments. This is particularly useful if you are buying a new property. Through a reputable currency dealer, forward buying your currency is very straightforward. Simply book an exchange rate and send your dealer a deposit, usually 10% of the contract value. The 90% balance of your currency contract is payable when you wish to have funds transferred overseas. Many dealers recommend spreading your currency risk by splitting your currency requirement in two, buying half on a forward contract, as above, and the rest nearer your completion date.
Will foreign exchange dealers offer advice about market conditions and rates?
Currency dealers are not regulated to give advice but many will provide you with information about prevailing market trends and currency movements. However, remember that no-one can predict the markets with any real certainty. You will have to make your own decision about when to buy currency, but market knowledge and experience imparted by your currency dealer will hopefully make that decision easier!
How do I pay for my currency?
After fixing the exchange rate with your dealer, you will need to transfer funds to their client account. The easiest and quickest way is by bank transfer but some currency dealers will accept a cheque. Bear in mind that your cheque will have to clear before funds can be sent. Once the dealer has received your cleared funds, they will transfer your currency to the account of your choice.
How can I find out current exchange rates?
The Interbank rate can readily be found on the internet and on Ceefax. Although a useful guide to current market levels, do bear in mind that unless you are trading millions of pounds on a regular basis, you will not receive the Interbank rate for your own transaction! For a live quote on the amount you are looking to exchange, it is best to call your currency dealer.
How long will my funds take to transfer to an overseas bank account?
Foreign exchange dealers use Electronic Funds Transfer and can generally get the funds into the destination account a good deal quicker than a high street bank. Moneycorp has a same-day transfer service to most European countries and North America, and next day for all other destinations. Bear in mind that there is sometimes a short delay in the receiving bank before your account is credited, this can usually be overcome with a proof of payment document that your currency dealer can provide on request.
Transferring currency to and from the US?
So why use our recommended Currency dealers rather than your bank?
Typical benefits include:
· Extremely competitive exchange rates
· No commission charges
· Lower transfer fees than the bank
· Faster transfer times than the bank
· The ability to “fix” an exchange rate for up to two years
· Free market information and guidance
· Extended opening hours in the UK
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