Currency Exchange Brokers

Hannah Beecham

Don't Bank on Foreign Exchange

When juggling currency swaps, here's why you need a broker not a bank.

Millions of Brits own a property abroad and with the continuing threat of a UK housing slump forcing their hands, it looks like many more of us will continue to track down overseas opportunities.

Whatever the reasons for buying a foreign property, one thing is for certain and that is it will be crucial to achieve the best deal possible on the exchange rate to avoid losing many hundreds of pounds when transferring the wherewithal to buy overseas.

This isn't the time to turn to the high street banks. Why? They just aren't offering anywhere near a competitive enough deal to make taking your business there worthwhile. Rather, you need to be shopping around the foreign exchange specialists which are offering appreciably better rates.

Compare these rates

Just two years ago you could exchange two US dollars for your pound. But, in March 2010 that same pound can only be swapped for US$1.5 - a difference of 50 cents. Now multiply such a loss by the many hundreds of thousands you'd be shelling out to buy dream home and you realise just how much havoc volatile exchange rates wreak. That money that's vapourised into the ether because two currencies have fallen out with each other could have been spent on building work if you are renovating, or even on flights for more visits if you are buying a holiday home. This also illustrates why it's imperative to get the best possible deal for your currency exchange deals. Those decimal point variances really do add up. And if a bank is holding back on offering its loyal customers a decent deal, then don't give them your business.

Buying forward

As well as offering a much improved currency exchange rate, forex specialists also provide a wider range of services, including forward contracts. A forward contract is a great option if you don’t need your money straightaway, but want to take advantage of the current rate existing between two currencies. Forward contracts are available for time frames up to two years. This ability to buy your foreign currency early will also help you keep within your purchase budget. And that's because through fixing the rate early on in the process, you'll know exactly what to expect by way of the final cost of the property purchase.

Such a facility is particularly appreciated by investors buying off-plan, as they'll be paying in instalments over a period of months or even years. Without such a fixed rate contract, purchasers buying off-plan have found in between putting down a deposit and making each of the payments, the exchange rate between the buying and selling currencies has fluctuated to such an extent many have run out of money before making the final purchase payments. Taking advantage of a forward contract and locking into the rate when the first deposit is made avoids such an outcome.

A good exchange rate can make a huge difference to an overseas investment, and can save savvy buyers thousands.