Want to buy a holiday home this year? Getting the best exchange rate could add thousands to your budget
If you are thinking of buying overseas chances are it's an escape to the sun that's on your mind.
According to research from Moneycorp and Savills, France and Spain are the favourite countries for Brits to own a second home, together accounting for just under 50% of all second homes sampled in the survey.
If you want to join them a relatively strong pound and depressed property prices on the continent, mean now could be a good time to buy.
Even in favoured sunny patches the lasting effects of the recession means there are still many cheap homes for sale.
For example, Spanish property prices are around 50pc below the prices commanded pre 2008 and property on the Greek Islands are around 30pc lower.
Or if you're tempted to test out potential untapped property hotspots of tomorrow, eastern European countries like Bulgaria are still full of potential bargains.
This overlaps conveniently with a recovering UK economy and a stronger pound. At the time of writing the pound buys around €1.25 – it was close to €1.14 in the summer of 2013.
This is not a small detail if you are buying a property overseas, as these rate fluctuations will give or take thousands from your budget.
For example, during the last twelve months a £150,000 budget could have been as big as €190,500 or as small as €171,000 – a difference of €19,500. So, getting a good exchange rate on your purchase can make a big difference.
This is where City AM International Payments, provided by exchange experts Moneycorp, can help. The expertise provided by Moneycorp can help make sure your budget is boosted by great exchange rates. The service offers exchange rates which are typically 3-4pc better than the rates offered by high street banks. So, on a transfer of £200,000 to buy a property you could save more than £6,000. However, the biggest advantage of using the service comes from Moneycorp's expert guidance on the foreign exchange market.
You will be allocated a personal account manager who can offer you help with timing your exchange to make the most of foreign exchange market movements. They can also explain the advantages of the range of specialist exchange tools on offer.
Often ‘forward contracts’ are used when buying a property overseas. These lock an exchange rate for a payment that can be made at any time within the next 24 months. For example, let's say you are buying a home in Spain costing €200,000. At the current rate of £1 = €1.25, then this property will cost you around £160,000.
If sterling weakens to £1 = €1.20, it will cost about £166,000. That's would be a £6,000 increase. However with a forward contract you would be locked into the €1.25 and you will not have to worry about the market moving against you. Moving your funds overseas will also cost less than a high street bank.
City AM International Payments fees are free online and a small charge applies when making a transfer over the phone, typically you would pay around £20-40 to make the same transfer with most banks.
And if you can rest easily knowing your money is in the safe hands of Moneycorp, who handled 6.4 million transactions last year trading over £10 billion in more than 150 currencies. Moneycorp are authorised and regulated by the Financial Conduct Authority and have been dealing in foreign exchange since 1979.