Currency affairs

Using an exchange company to finance your French property purchase could help make your money go much further, explains Matthew Harris

Arranging your currency is unlikely to be the most glamorous or exciting part of your new property purchase, but by avoiding the common pitfalls you can 
maximise your exchange rate and make your money go further. Using a currency exchange company can help you do this. Here are six ways to make savings on your purchase, leaving more money in the bank with which to make the most of la vie française.

CURRENCY BROKERS

When you buy a house in France, the price you pay will be in euros. When doing this, many people will simply go into their bank and ask for their money to be converted into euros and then sent across to France.

This approach can be rather expensive, however, as the exchange rates offered are not always particularly advantageous, so your euros may cost you more than they need to. When the time comes to convert your money, currency brokers can offer you a better rate of exchange, which can be up to 5% in some cases.

When we look at that percentage in terms of house-buying money, you could save thousands or even tens of thousands of pounds. Your currency broker should be able to convert your funds on your instruction and then send them on to your specified destination, whether that is your own account, or a third party such as a solicitor or notaire.

The entire process can be faster than using your bank to arrange the transfer too, as most brokers use the SWIFT network. Your money will be received at the other end within hours of it being sent, and they can track its progress.

FORWARD CONTRACTS

A lot of people start taking a keen interest in the exchange rate when they decide to buy a property, and rightly so. A small movement in the rate can have a big impact on the amount you will pay in sterling for your property, even though the amount you have in euros at the other end remains the same. Currencies trade 24 hours a day, and between the time you make an offer on the property and take possession, you could find it has moved by over 10%.

A forward contract allows you to lock in your exchange rate when you make your offer, so you know how much it will cost you in both euros and sterling. This means you don’t have to worry about paying more for your property if the market moves in the wrong direction. You wouldn’t buy a property in the UK without knowing how much it is going to cost, and with a forward contract there is no need to do this in France either.

ASK YOUR BROKER’S OPINION

Currency brokers aren’t there to tell you what to do with your money – it’s your money so it’s your decision on how and when to exchange it. But studying the markets is part of their job, and they are usually happy to pass on their thoughts, knowledge and opinions to you.

They don’t have a crystal ball and they can’t predict the future, but they can take a holistic view of the market situation and tell you what they would do in your shoes.

SAFEGUARD YOUR MONEY

At some point in the process, you are going to have to transfer your money to your currency broker for them to convert to euros. You need to know that your money is safe and will get to its destination as expected, and as we have seen in the financial system, size is not necessarily a guarantee of safety. All currency brokers should be registered with or authorised by both HM Revenue and Customs and the Financial Conduct Authority (FCA), formerly the Financial Services Authority (FSA). You can check their credentials on the websites of

these authorities.

It is also considered best practice for currency brokers to safeguard all of their clients’ money away from the rest of their business, just as a solicitor would. Your broker should be able to show you proof that they protect your money in this way.

PLANNING AHEAD

It is unlikely that the transfers relating to the purchase of your property will be the last ones you make to France. If you’re purchasing a second home then you will have to send money to pay the bills, and to spend while you’re enjoying time out there. If you’re moving or retiring there permanently you may have income, salary or pensions which are still paid in the UK, and you will need to transfer these across to France too. You can still use your currency broker in all of these scenarios, and benefit from a better exchange rate.

MEET FACE TO FACE

Several times each year you will be able to attend a French Property Exhibition, where you can meet currency specialists, as well as professionals and businesses able to assist you with other legal and financial matters related to your purchase. The next French Property Exhibition takes place at London Olympia on 20-22 September 2013.

Matthew Harris is director of Columbus Currency

Tel: 0203 384 7215

www.columbuscurrency.com