One of the obvious problems with buying a property outside of the UK is that the currency is different, in our case, buying our Gite in Brittany we needed Euros, and you need a lot more euros than you do for your two week summer holiday! So you don’t actually know how much you’re property is really going to cost you until you get your hands on the Euros. For example, buying a property for 100,000 Euros could cost you £70,921.99 at an exchange rate of 1.41 from a High Street bureau de change, or it could cost you £68,027.21 at a rate of 1.47 from a currency broker, a difference of £2894.78 on a relatively small amount (These were the rates that were around when we were buying and may be different now).

So obviously you’re not going to rush down to the Post Office to buy 100,000 Euros to complete your property purchase. So what are your options. Well you could use your bank, better than the high street exchange rates but not the best, or you could use a currency dealer which offer the best rates.

There are a lot of currency dealers out there nowadays and we ended up joining three of them, 4x, HiFX and Currencies Direct. The theory was we would phone all three up to see who would give us the best rate on the day (well with 4x you don’t need to phone them up as you can see their rates on the Internet). In the end we used 4x as they gave by far the best deal. When we phoned HiFx they offered us around 1.45, we told them we could get 1.47 from 4X (in our above example of a purchase of 100,000 Euros that is a difference of £938.31). They then had a chat with their boss and then offered us their corporate rate, which was still a few cents off the 4x rate so we went with 4x. Currencies Direct were similar to HiFx but a slightly lower rate. As you can see, it is definately worth shopping around!

4x have a great service as as you just download and install their software and then you can see the rates change live and buy at the price you see. As soon as you hit buy the rate is fixed at that rate. You then need to get the funds to them by bank transfer by the close of the next working day and they will transfer the funds to the Notaire for you, or wherever you need the funds sending. It really makes you feel like an Foreign Exchange dealer using their on-line system, well for once in your life anyway!

It is worth noting that you must register with the currency dealer before you can deal, due to money laundering regulations, so don’t leave it to the last minute! You can register with them and then never use them, it doesn’t cost you anything so do it well in advance.

You have a couple of options when purchasing your currency, you can buy with a spot rate, i.e. the current price now and complete the transfer immediately, well as fast as bank transfers occur which is a few days, or you can buy a forward position, i.e. get todays rate but complete the currency purchase on an agreed date in the future. This is ideal if you think the rate is dropping (real FX dealing!!) or if you just want to be certain of the price of your property and to elimnate any currency fluctuations. You just pay a deposit and the rate is adjusted slightly depending on how far into the future you are purchasing. You must then complete the purchase on the pre-agreed date at the pre-agreed rate. No matter what the currency rate has done since you made the deal, you know exactly what it will cost you.

Please remember that all of this process takes time, from the moment you purchase your euros you have to get the payment to the currency dealer (at least the next business day but it took us two business days), who will then transfer the currency to the Notaire (work on five working days for this), or wherever you are sending the money. So make sure you do this in plenty of time prior to you actually completing the purchase as cleared funds must be with the Notaire prior to you signing the Acte de Vente. If not, the purchase would at best be delayed and at worst could be cancelled with you losing your deposit.

Usually you can only use these services for transferring large amounts of money as they are just not cost effective for smaller amounts but if you have a euro mortgage to pay it is worth talking to them about regular monthly deals as you should be able to get a decent rate for this.

 2 Bedroom Cottage / Gite near Dinan, Brittany, France

Buying, Owning and Running a Gite in Brittany Blog

©Derek Arkwright 2007

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