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CURRENCY CASE STUDY


“We saved £5,000 when we bought in France”


Owning your property as a holiday home If you’ve fi nanced your property abroad with a mortgage from a local bank and will be making your monthly repayments from the UK, you will need to make regular transfers abroad. Other reasons you might need to


transfer money overseas regularly as a holiday homeowner include paying bills, including utilities and taxes, paying a rental management company and paying community fees. And in reverse, you may need to repatriate money on a regular basis if you receive payment for rentals direct to your overseas bank account. Currency brokers can help you do all


of the above with their regular payment plans. Typically, they can set up automated payments via Direct Debit from your UK bank account and can offer three options for regular payments. Firstly, you can fi x the amount of pounds you send overseas, for example each month, meaning the local currency received in your overseas bank account will fl uctuate with the exchange rate. Or, in reverse, you can fi x the amount of local currency that is paid into your overseas account, meaning the amount of pounds being debited from your UK account will vary according to the exchange rate. Thirdly, you can use a forward contract to fi x the exchange rate you receive on all regular payments over a specifi ed period, such as 18 months.


Moving or retiring abroad If you’re making a permanent move to your property abroad and have a UK pension or source of income, again you will need to make regular transfers between an account in the UK and one abroad. Forward contracts are especially useful for transferring pensions as they allow you fi x a rate for up to 18 months or two years in the future, meaning the recipient knows precisely how much they will receive each month in both Sterling and their local currency. A popular option amongst people relocating abroad who need to transfer large amounts of funds is to spread their exposure to exchange rates by swapping half of their funds with a spot contract or forward contract (so at a fi xed rate they are happy with) and then the other half with a limit order. Using a limit order means your broker holds on to your remaining funds, exchanging them only when they can achieve a rate agreed by you. You’d do this if you had an inkling that the rate might go in your favour over the next few months but didn’t want risk all your funds – just in case things went the other way.


“In December 2010 we purchased a property in France for €158,000, and have saved over £5,000 by using currency broker Foremost Currency Group. “We did this by fi xing our exchange rate in December with a forward contract – which was a very good move indeed as rates were much lower come March when we needed to send the euros. If I hadn’t used a currency broker and had gone straight to the bank in March to transfer the euros, it would have cost over £5,000 more. I wouldn’t hesitate to recommend using a broker like Foremeost to anyone buying property abroad.” Philip Grey, Poitou-Charentes, France.


Selling up or moving back to the UK Repatriating money from abroad is the fi nal way currency brokers can help British people get the most from their money when they sell their holiday home or are moving back to the UK.


22 A PLACE IN THE SUN APRIL 2011


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