Changing fortunes

Can currency exchange companies protect buyers from currency fluctuations?

Jennifer Roberts asks:

We are planning a move to France and are currently in the process of visiting the properties on our shortlist. One of the options we are considering is to use a currency exchange company, but before we do we want to know in what ways they can help to protect us from currency fluctuations?

Judy Mansfield of First Rate FX (www.firstratefx.com) replies:

Currency fluctuations can make budgeting for your French home almost impossible. You are right to be considering using a foreign currency specialist even before you cross the Channel to start your house search. The tiniest adverse movement in exchange rates can mean a difference of thousands of euros to your budget. Even once you have found your dream property, a lot can happen in the time between signing the compromis, when you typically will be asked to pay a 10% deposit, and the acte de vente when the balance becomes due. You can avoid having to pay more for your euros than you had anticipated by using the services of a foreign currency specialist.

There is no charge to set up an account with a foreign exchange company. Not only does it mean that you will be in a position to move your funds immediately to pay a deposit and secure that dream home, but your currency trader will be able to monitor the markets on your behalf and provide you with the most cost effective solution to meet your requirements. There are various foreign exchange contracts, depending on whether you are buying a restoration project or a new apartment, and whether you are paying in one large cash payment, making stage payments for a new build or perhaps setting up monthly mortgage payments. A good broker will be able to help you protect your money from exchange rate movements. Quite simply, a forward contract is an agreement to buy a specific amount of euros at an agreed rate on or before an agreed date.

By fixing the rate of exchange in advance, you can protect your house-buying budget against market fluctuations and have the security and peace of mind of knowing that no matter what happens to the GBP-EUR exchange rate, your funds are secured. You will save money with a specialist foreign exchange company by benefiting from their access to commercial exchange rates that are simply not generally available to the private individual, and also by avoiding bank charges which can add an average £30 to every transaction.