A CURRENCY SPECIALIST S GUIDE TO BUYING OVERSEAS PROPERTY

Transcription

1 A CURRENCY SPECIALIST S GUIDE TO BUYING OVERSEAS PROPERTY

2 WELCOME Welcome to Smart Currency Exchange s Guide to buying overseas property. My name is David Comber, Senior Trader at Smart Currency Exchange, a firm that helps people make international money transfers. I have been working at the company since 2007 and in that time I have been fortunate enough to help a lot of people save money on their overseas property purchases. Our experienced team are specialists in the overseas property market this means that we have seen the costly problems that people come up against time and time again and have the know how to help you avoid encountering the same. In this simple handbook, I will talk you through the recommended steps you can take to plan for your move effectively and avoid losing money. I outline my tips for those of you embarking on the exciting process of buying overseas and explain the services we offer that can help you along the way. You will also have the opportunity to read about Smart Currency Exchange clients that have successfully purchased property overseas and who, in the course of doing so, saved money by using our services. I hope that you find this guide useful. If at any time you have any questions or would like to talk to us about your particular needs, we are just on the other end of the phone. Freephone (UK only) or +44 (0) from abroad. Enjoy the guide. David Why worry about currency exchange rates? EACH YEAR THOUSANDS OF OVERSEAS PROPERTY BUYERS PROCEED WITH PURCHASES OBLIVIOUS OF JUST HOW MUCH IMPACT THE EXCHANGE RATE IS HAVING ON THE COST OF THEIR DREAM HOME. Exchange rates fluctuate on a minuteby-minute basis and these fluctuations can dramatically affect on the price of the property. In short, if you act at the right time, you can secure that perfect home; if you disregard the effects of exchange rates the price could change significantly, taking it beyond your budget. Certainly, you can lose a lot of hard earned money. It is all about effectively managing your currency needs to ensure peace of mind and money in your pocket - today I tell you how. You may be surprised to learn that there are several currency exchange options, which are usually selected dependent on your situation and the advice you receive from a specialist broker such as Smart Currency Exchange. Read the following to better understand which option may be best suited for your needs 2 FOR MORE INFORMATION CALL OR INFO@SMARTCURRENCYEXCHANGE.COM

3 TOP 5 CURRENCY TIPS FOR A SUCCESSFUL PROPERTY PURCHASE 1 Understand the consequences of currency fluctuations Fluctuating exchange rates can make all the difference when it comes to your overseas property purchase and we re not talking just a few pounds! To demonstrate how significant this impact can be, allow me to provide another example. Let s take a look at a 250,000 property and how the price could be affected by exchange rates. When you first looked at the property, the available exchange rate from Smart Currency Exchange was 1/ This means that if you were to buy it that day it would cost you 211,738. Say you decide to wait, or unforeseen circumstances occur which mean that your plans are delayed. When you next look at the rates, they sit at This means that the house has gone up in price to 215,072. You decide to wait a while, in the hope that the rates might move in your favour but unfortunately they go the other way and end up at The same property that would have set you back 211,738 a couple of months previously, would now have a price tag of 221,435 which amounts to a loss of 9,697. Just think, this sum could be spent furnishing or renovating your new home, rather than just being eaten up by the volatile currency markets. This leads me to my second, third and fourth tips (2) use a forward contract to minimise risks and potential losses, (3) that it pays to have access to someone with knowledge of the markets and how they are likely to move and (4) know your budget before you travel. Your trader can use their market knowledge to help you to avoid losing similar sums of money. 2 For peace of mind, use a forward contract to fix the price of your property There are two important things that you need to know about a forward contract 1 They can help you to avoid losing money 2 They allow you to fix the price of your property You wouldn t buy property in the UK without knowing the price, so why would you in another country? For example, a sum of 300,000 on January 1 st 2013, when the exchange rate was 1/ 1.23, would have cost you around 243,900, whereas buying the same amount of euros on August 1 st 2013 would have cost around 262,000, when the rate was 1/ Forward contracts help remove the risk involved in buying abroad by helping to lock in exchange rates at the point that you commit to buying a property. In this instance: for a small deposit of up to 10 percent of the total amount that you wish to transfer, we would help you to lock in an exchange rate that you are happy to trade at. This way, when the time comes to transfer the rest of the balance, you know what rate you will be getting, regardless of what the currency A CURRENCY SPECIALIST S GUIDE TO BUYING OVERSEAS PROPERTY 3

4 market has been doing in the meantime. This approach effectively removes all risk and brings you back in line with how things operate in the UK market where you know what the property will cost you when exchange rates don t come into play. If you are looking for peace of mind during your buying journey this is the contract for you. 3 Open your account with Smart Currency Exchange ASAP If you know that at some stage in the future you will have to transfer money abroad, we suggest signing up for your free account with Smart Currency Exchange as early as possible - visit smartcurrencyexchange.com/newaccount Opening an account comes with no-obligation to trade and it means that straightaway you will be able to establish the best options for you with your personally assigned trader, according to your individual circumstances. We will guide you through the whole process, from the moment you decide I m very impressed with Smart Currency Exchange. On the same day of payment I had confirmation of the transfer to my Spanish bank. Also, a sum of 4,000 which I d inadvertently overpaid was refunded brilliant. I d most certainly use Smart Currency again. John Matthews, Cardiff bought property in Spain. to buy, until the time comes to transfer your currency. My colleagues and I spend our days monitoring the currency markets and we know how things move, what economic events and announcements affect exchange rates, which patterns to look out for and of course, the best approaches to take to avoid losing money. We are here to help you and to share this knowledge, so that when the time comes to make the transfer, you are doing it at the right time - and at the right rate. How a forward contract can help with your purchase 1.20 JULY ,000 costs 84,502 AUGUST ,000 costs 87,819 (+ 3,317) In just 3 months, the price of an overseas property has changed dramatically COST OF 100,000 INCREASED BY 3, July 2013 August 2013 GBP/EUR EXCHANGE RATE 4 FREEPHONE FROM UK INFO@SMARTCURRENCYEXCHANGE.COM

5 4 Know 5 Prefunding your sterling budget before you travel We can help you to establish a budget before you set out on a trip to view property. This should be your choice if you don t want to waste your time looking at properties that are out of your price range. Although it would be lovely to have the time and the funds to go on multiple visits to your country of choice, we understand that this isn t always an option. our client account Experience has taught us that both the speed and timing of the process can be an important - and in some cases critical - factor in securing the property for the right amount. This is why we offer another very useful tool the ability to prefund our client account. We all know about the difficulties faced when trying to get the bank to do what we want it to do and in a timely manner - and that s when we are in the same country! Just imagine the further difficulties that can arise when you are in a different country; limitations on how much can be transferred each day, language barriers, automated switchboard, authority limits, time differences you are almost certainly aware that arranging sizeable transfers from afar using your bank has the potential to become very stressful. So here s one way in which our service could help you. You are moving overseas and you don t want to exchange the funds into the other currency until a later date, but you know that you would normally need to authorise the bank Case study: The forward contract how it worked for Mr Jones Mr Jones found his perfect villa in Spain in mid-june The purchase price (including buying costs) was 300,000, so he paid a 30,000 deposit to secure the property. He used Smart Currency Exchange to send the deposit to Spain, saving himself approximately 1,000 by not using his bank. Prior to looking for his villa, Mr Jones had opened an account with Smart Currency Exchange at the time all his money was in a UK bank account and he knew that with Smart Currency Exchange, when the time came, he would be able to call his account manager and make a currency transfer. Mr Jones anticipated completing his property purchase at the end of July. Wanting peace of mind that the Sterling cost of the remaining balance due on his villa wouldn t change before then, he asked Smart Currency Exchange to secure 270,000 at an agreed exchange rate of 1/ 1.160, fixing his final payment at 232,759. To do this, Mr Jones transferred a 10 percent deposit ( 23,275) into his Smart Currency Exchange s segregated client account. When Mr Jones completed his purchase on July 31 st, he transferred the outstanding amount due on his forward contract ( 232,759 minus his deposit) to the client account, and in turn Smart Currency Exchange sent 270,000 to the beneficiary s euro account in Spain. Mr Jones also saved money through his forward contract. The euro strengthened towards the end of July, so if he had waited until July 31 st to buy 270,000, it would have cost him another 6,000. Of course, the exchange rate could have gone the other way. (Note: quoted exchange rates are a guide only) A CURRENCY SPECIALIST S GUIDE TO BUYING OVERSEAS PROPERTY 5

6 transfer in person, which means that you have to make the exchange sooner than you would like. We find it works well if you authorise the transfer of your funds to the appropriate Smart Currency Exchange Client Account - we have client accounts in over twenty different currencies so you can then undertake the exchange and transfer in your own time and from anywhere in the world. This is because you have your own personal trader who you can reach easily over the phone or by , and everything can be handled quickly and efficiently, thereby reducing the stresses and worries so often a part of an overseas property purchase or move. Simply put, your funds will be held in a secure client account and all you need to do is call your trader exactly when you want, agree the exchange rate and Smart Currency Exchange will send your currency to the designated account for when you tell us it is needed. Another way this service can help you is if you are heading over to another country in the hope of finding a property to buy. You can lodge an amount of funds with us which are then ready to be quickly exchanged and sent over to be used as a deposit - no messing around with bank transfers when you are away. One further example of the benefits of prefunding our client account is if you are moving abroad and will not have the time to arrange the transfer of funds yourself when the proceeds of your house sale have been realised. In this situation you can arrange for the solicitor (or foreign equivalent) to have the funds transferred directly to us. Once again, these are then ready to be exchanged at your own leisure with a quick call to us, without the stress of dealing with the bank at all. Prefunding is just another service offered by Smart Currency Exchange that demonstrates why we are specialists in overseas property. We understand what buyers need and offer them effective solutions. We estimated that with the far better exchange rates than our high street bank, Smart saved us between 6,000 and 7,000 on the price of our apartment in Greece. Steve James How exchange rates can affect property price LOSS OF 5,500 IN LESS THAN ONE MONTH In less than a month a transfer of 100,000 to Euro could have lost in value 5 cents By using Smart, the client can fix a rate at a good time and protect against this kind of fluctuation May 2010 July 2010 August 2010 GBP/EUR EXCHANGE RATE October 2010 December 2010 Smart got 123,000 for 100,000 in July Three weeks later the client would have got 117,500 6 FREEPHONE FROM UK INFO@SMARTCURRENCYEXCHANGE.COM

7 WHY YOU SHOULDN T USE THE BANK When it comes to making international transfers we believe it would be foolish to use your bank rather than a currency exchange expert. As specialists in the overseas property industry, Smart Currency Exchange is a safe option. Here are some pressing reasons why you should not use your bank: Overseas property purchasing is not the banks area of expertise Banks do not understand the overseas property market. Some could argue they don t understand the UK property market, given the problem loans and write downs we have seen over the last few years! High street banks core business is supplying current accounts and allowing you to efficiently pay and receive small payments. They certainly don t adequately understand how to manage exchange risk and minimise losses, or how to transfer funds overseas quickly and efficiently. Banks have less favourable rates When it comes to exchange rates, the banks cannot offer the same as currency experts. Smart Currency Exchange has access to and deals with live currency markets. These are the ones that fluctuate practically every second of the day, and having direct real-time access means that you get a much better exchange rate. Typically, if you were to use your bank, you would find that the rate that you get quoted remains the same throughout the day, despite how much the live rates fluctuate in your favour. This is why they build so much fat into their rates. Smart Currency Exchange can typically save you 1-4 percent on the rates offered by the bank. Even if you are transferring just a small amount, the savings that you can make would still be apparent, but it is when transferring large sums of money that these savings really start to add up. In fact, if you are transferring a significant amount for a property purchase, using Smart Currency Exchange could be enough to stretch your budget into a whole different higher price range. When making these kinds of transfers, you need to make sure that you utilise a service that understands the huge difference that small movements in exchange rates can make. In addition, although the savings might be less, if you make a series of payments, such as monthly mortgage payments, again the amount that you save starts to escalate. So it is still worth seeing how much you could save - even on a smaller value transfer. Banks charge transfer fees Then we encounter the issue of transfer fees. Banks will charge these on each and every transaction, no matter how big or small. A CURRENCY SPECIALIST S GUIDE TO BUYING OVERSEAS PROPERTY 7

8 You can typically expect to be charged around in transfer fees by your bank. In contrast, Smart Currency Exchange will only charge a nominal fee for transfers that are less than 3,000 ( 5 for euro transfers and 10 for dollar transfers). We do this just to cover our own costs with our bank and not to make money. You are not their priority In addition to offering less competitive exchange rates, and service fees, banks can be slow at sending money to foreign bank accounts. This is typically around 4-5 days rather than the 1-2 days that is standard here at Smart Currency Exchange. And it s not surprising the banks main focus isn t foreign currency transactions ours is! Bank charges for currency transfers are ludicrous. Smart Currency Exchange s cost effective service has saved us money and allowed our funds to go a little further than expected. On fees alone we saved money. For example, to transfer 1,500 to Barbados would have cost me approximately 20 with my bank. But I ve transferred a total of 208,000 with Smart and incurred only 10 in fees and that was only because one transaction was under 3,000 Smart charge no fees for transfers above that. Marcia Mercer, Cheshire. Bought in Barbados. YOUR POST- PURCHASE CURRENCY NEEDS When the final payments have been made, you have the new property keys in your hand and you are celebrating the huge savings that we have been able to secure you on your purchase, you will need to consider how you will deal with the future transfers you will need to be making back to your UK account. Whether you are moving to the property permanently or are using it as a holiday home or for rental investment, chances are that you will have to transfer money on a regular basis between the UK and the country where your property is located. We know that Smart Currency Exchange helps you avoid losing money by being cheaper than the banks; with better rates and minimal, if any, transfer charges. So you will save a lot of money using our services on an on-going basis. Smart Currency Exchange can also help you with our range of smaller payment options Option 1 Regular payments We can help you to deal with any financial commitments that you have on a regular basis. There are two ways this works: A. You set up a standing order to transfer the same amount of money, say, each month, into the Smart Currency Exchange client account. On receipt of this payment, one of the traders will exchange your funds and transfer them immediately to the account already designated by you. 8 FREEPHONE FROM UK INFO@SMARTCURRENCYEXCHANGE.COM

9 B. You transfer a different amount on a regular basis, but not monthly, to the same account. On receipt of this payment, your trader will exchange your funds and transfer them immediately to the account already designated. As well as saving you money, both are very quick and easy to use and cheaper than using your bank. Once the exchange has been made, you will receive a confirmation . Each transfer of less than 3,000 will be subject to a small administration fee in order to cover our costs with the banks. As rates will be continually changing, the amount that you will receive each month will inevitably vary using this method. Unless you consider the next option: Option 2 - Forward buying for regular payments There is a way to avoid the worry associated with never really knowing the amount that you will get into your account each month. This certainty is rather important when you are relying on this payment to cover your living costs, for example if it is your pension being paid into your account each month, a monthly mortgage payment, bill payment, salary payment or other similar commitment. You can avoid this uncertainty by securing a rate for a defined period of time. The maximum period for this type of regular payment is one year. You pre-book the amount that you will be transferring over the course of the determined period and the regular payment will be taken out of this every month at the rate that you agreed, regardless of market movements. In order to start this type of forward contract, we need to take a deposit of up to 10 percent of the value of the entire contract up front. This deposit payment will not release any funds from the contract but can be used towards the last payment, or can be credited back to you on completion of the deal. HOW IT WORKS IN PRACTICE Transferring money from a UK pension regular payments to France Are you on the verge of purchasing property abroad or emigrating? If so, using Smart Currency Exchange to transfer money from the UK to an overseas bank could save you thousands. To show you how, here s the story of a typical client, Mr Maurice, who avoided losing over 20,000 on one currency exchange. In 2005, Mr Maurice was emigrating to France. At this time, the rate offered by Smart Currency Exchange was considerably better than those offered by the banks. After completing his initial transfer, which was the transfer of euros to purchase his new home, he had saved over 20,000 by transferring funds through Smart Currency Exchange. This meant he had saved enough money to pay his legal costs, removal costs and buy some new furniture for his new home. Since then, having transferred his pension each month, he has saved at least 75 each month compared to the rate he would get from his bank. So, each year he saves over 900, which means that he has an extra 1,000 in his pockets, rather than the bank s! In addition, by using Smart Currency Exchange for all his transfers, Mr Maurice also eliminates the add-on transfer cost that the bank charges for sending funds abroad. This could be as much 25 per transfer, so this saves him around 100 a month or 1,200 per year. In the current economic climate, that extra 1,400 per year is gratefully received! A CURRENCY SPECIALIST S GUIDE TO BUYING OVERSEAS PROPERTY 9

10 WHY USE SMART CURRENCY EXCHANGE? 80% of clients have switched to Smart Currency Exchange from banks or competitors 92% state Smart Currency Exchange offer impressive or good rates 98% of customers would recommend Smart Currency Exchange My fellow traders and I do not work on personal commission. This means that we value every client equally, regardless of the value of their currency transfers. Our primary focus is securing you the best exchange rates and giving you a good and proactive service so that you continue to use us for all your future currency needs. We pride ourselves on focusing on customer service we won t keep you on hold, or pass you around from person to person and you will be assigned an allocated trader on day one who will familiarise themselves with your needs and will then be on the phone or whenever you need them during the whole buying process and beyond. I understand why some clients have reservations when it comes to transferring large sums of money with an organisation that isn t their bank, so allow me to put your mind at ease. Smart Currency Exchange provide a 100 percent secure, efficient and effective service when transferring funds internationally and we are authorised by the Financial Conduct Authority (FCA). This means that the following measures are in place to protect your best interests: Segregated bank accounts When trading with Smart Currency Exchange, your money never actually ends up in one of our accounts it is held in a segregated client account with one of our banks. This means that your money remains secure at all times. Operating funds within the business The permanent capital held within the business is sufficient to meet the on-going operating requirements of the business and is well above the levels specified by the FCA. Verification of key personnel Senior management are vetted to ensure they are suitable to run such a sensitive business. Since commencing trading in 2004, Smart Currency Exchange has made in excess of 2 billion in transfers for its valued clients. Smart Currency Exchange were excellent from the outset. In this day and age, it s nice to actually talk to a human being especially when you are dealing with substantial sums of money. When we called our trader, he actually picked up the phone, which is practically unheard of in this age of automated phone systems and answering machines! I have already recommended Smart Currency to family and friends, and will continue to sing their praises to any others that will listen. Tim Elvins, bought a property in Florida. 10 FREEPHONE FROM UK INFO@SMARTCURRENCYEXCHANGE.COM

11 REMEMBER... SIGN UP EARLY TO EFFECTIVELY MANAGE YOUR CURRENCY NEEDS You need to be in-the-know about exchange rates from the very start of your buying journey The best way to do this is to sign up for an account with Smart Currency Exchange today. Why? It s free to sign up There is absolutely no obligation to trade with us It grants you immediate access to the knowledge of an experienced trader who specialises in the currency markets and who will listen to your needs and then help you to plan accordingly. The timing of your currency purchases are key to their success. By signing up early with Smart Currency Exchange, you reduce the risk of losing money. A window of opportunity is created when you make the commitment to purchase an overseas property and when you know that you will have access to the funds. The whole Smart Currency Exchange team are committed to helping you to make the most of this window of opportunity in the following ways: Offering you a range of solutions to meet your particular transfer needs Sending your foreign currency to the designated account quickly so that you can secure that dream property Offering guidance each step of the way I really appreciate the service I received from Smart Currency Exchange in all exchanges involved in my emigration to Canada from Scotland. I was guided through the process with such patience and understanding - far more than any bank would have done. The Smart Currency team managed to make it seem as if I was their Number One customer, and the service remained personal and focussed on my situation throughout. I had a tight deadline for my purchase in Canada - and Smart Currency Exchange made sure I caught it. My lawyers advised it was the swiftest transfer they had seen from a UK client. Margaret Johnston A CURRENCY SPECIALIST S GUIDE TO BUYING OVERSEAS PROPERTY 11

12 FIND OUT MORE: CALL VISIT COPYRIGHT AND DISCLAIMER A CURRENCY SPECIALIST S GUIDE TO BUYING OVERSEAS PROPERTY First published in Great Britain in 2014 by: Smart Currency Exchange Ltd, 1 Lyric Square, London W6 ONB Copyright 2014 Smart Currency Exchange. All Rights Reserved. Smart is a registered trademark of Smart Currency Exchange Ltd. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of Smart Currency Exchange. Visit our website at: The author and publisher of this publication have used their reasonable efforts in preparing it. The author and publisher make no representation or warranties with respect to the accuracy, applicability, fitness or completeness of the contents of this report. The information contained in this guide is strictly for educational purposes. Therefore, if you wish to apply ideas contained in this report, you are taking full responsibility for your actions.