The money
What is ‘foreign exchange’ and why is it important? If you are planning to buy a property in France, the transaction legally has to happen in euros. So if you hold funds in pounds sterling, or any other currency, you will need to consider the best way to exchange your local currency into euros, as well as the most cost-effective way to make the cross-border transfer into France. You can, of course, do
this directly through your bank, but it’s becoming more commonplace that high-street banks are not offering the best exchange rates, and can charge costly fees to send money internationally. This is where the help of a specialist foreign exchange company
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Understanding how foreign exchange works is important for French property buyers, writes Mar Bonnin-Palmer
can prove to be a real asset and critical to managing your budget. Given that the exchange
rate of any currency pair can move every second, it is highly unlikely that the exchange rate will be exactly the same the day you complete on your property transaction as the day you put the offer in. Therefore, the price you initially agreed might be quite different to the one you end up paying.
What drives exchange rate movements? Exchange rates are constantly fluctuating and some of these movements can be quite substantial and even completely unexpected. As an example, the pandemic in
“The exchange rate of any
currency pair
can move every second”
HOW TO PLAN AHEAD TO MAXIMISE YOUR BUDGET
Top tips on best way to manage and execute your international transfers when buying in France
1 SET UP A BUDGET IN ADVANCE: Deciding how much you can spend will help immensely on your property search. Make sure you account for the foreign exchange element and its volatility when you consider the budget. How much can you afford for the rate to move? Is there a danger that if the rates drop to a certain level, the property will become too expensive or you won’t be able to complete.
2 PLAN IN ADVANCE: It is a good idea to gather the information around the best way to pay for the property in advance of your search. Do you need a mortgage
to pay for the property? In which case you might want to check in advance the options available for you, as well as if you are suitable, especially if you live outside France. It is also advisable to
familiarise yourself with the exchange rates in advance. This will help you to set your budget and understand the options you have when you find a property.
86 FRENCH PROPERTY NEWS: March/April 2023
By doing that you are not only minimising the potential negative effect of the exchange rate fluctuations but you open the opportunity to take advantage of positive rate movements that will allow you to maximise your budget. A good currency specialist company will allow you to open an account ahead of any property viewing trips with no obligation or pressure to use their services and assist you from the beginning of the process.
3 GET A GOOD RATE OF EXCHANGE: Specialist foreign exchange companies tend to
offer more competitive prices than high street banks, with lower transfer fees or no fees at all. So, irrelevant of where the market is, a foreign exchange specialist can add value by showing you a saving.
4 SEEK EXPERT GUIDANCE: Buying a property abroad will usually involve three or four large transactions – for a deposit, completion funds, taxes and notaire fees. It is important to be aware of the amounts involved, the timing for such payments, and the risk that the exchange rates
©SHUTTERSTOCK
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