Buying and selling property overseas
Buying and selling property overseas usually involves transferring money from one currency to another.
Fluctuations in currency rates can make a huge difference to the amount of money you end up with – moves can be as much as 10% over the course of a few days. And that could put the house of your dreams financially out of reach.
Watch our 60 second video about how we can help you.
Minimising your risk
Unbeatable exchange rates for your property abroad
We can find you the very best spot rates (the rate to transfer immediately) or we can secure or fix your exchange rate with a forward contract. This means you can fix the rate now for a transaction happening up to 3 years ahead - so there are no nasty surprises on the day you buy your home abroad.
We offer the widest selection of ways to transfer currency and protect your money from fluctuations in currency values. Have a look at our Foreign Exchange Services section for more information.
Quick, safe, efficient
Whether you’re buying property abroad to retire, or want an overseas investment property, we make sure the currency exchange happens in the most efficient way possible.
We can transfer your money from your bank account at home to your overseas account. We can convert from and to virtually any currency. And if you’re selling, we can bring your money home quickly and safely – using our own overseas accounts if appropriate.
When the transaction has been made, we’ll contact you to let you know everything has gone through.
Examples of the types of ways we can help
Buying with a spot contract
In August 2010, Mr Davies bought a house in France. He needed to make an immediate transfer of €240,000 to complete the purchase.
He tried his bank, and they gave him an exchange rate of 1.1980. He came to us, and we agreed 1.2160.
He decided to work with us and transferred the sterling equivalent - £197,368.42 – to us. The very same day we received Mr Davies’ money, we made an onward payment of €240,000 to the French bank account he had nominated.
Because he worked with us, Mr Davies saved £2,995.47, enough to pay for his landscaping.
Selling with a spot contract
Dennis Hardman sold his Spanish Villa in October 2010 for €500,000. He wanted to transfer the funds back to his UK bank account.
We agreed an exchange rate of 1.1445, and he instructed his Spanish bank to transfer the €500,000 to World First’s to the euro account we hold in Spain.
As soon as we received the euros, we made a same-day transfer of £436,871, and Mr Hardman had the sterling in his UK account by close of business that day.
If he’d used his Spanish bank for the transfer, the funds could have taken up to seven days to reach his UK account, and had he gone with his bank’s exchange rate, he would have received £3,489 less than he did by working with us.
Buying with a forward contract
In January 2010, Mrs Connor agreed to buy a property in Florida. The sale was due to complete in April, when the payment of $410,000 had to be paid.
She was concerned that the exchange rate might move against her during those four months, and decided to fix the exchange rate in advance. It let her know exactly how much the property would cost on the day.
In January she fixed a rate of 1.6220 to buy €410,000, and paid us a 10% deposit.
Between January and April the exchange rate moved between 1.6450 and 1.5120. On the day her payment was due the rate was 1.5190.
If she had waited until April and exchanged her money at the prevailing rate, the property would have cost an extra £17,140.07.
|Cost of property in January with forward contract||$410,000||£252,774.35|
|Cost of property in April without a forward contract||$410,000||£271,164.02|
The rate could have improved by April too, in which case the property could have been less expensive. But Mrs Connor had budgeted to buy the property at a rate no worse than 1.60 – and fixing the rate in advance provided her peace of mind.
Using currency options
A British couple bought a house in Portugal for €325,000. They paid a deposit in January 2010, and agreed to pay the balance of €292,500 when they completed in June.
They were concerned about the fluctuating sterling/euro exchange rate and decided to hedge their risk.
They could have fixed their rate at 1.1550 with a forward contract – but they didn’t want to lose out if exchange rates moved in their favour.
So they booked a currency option called a participating forward because:
•It lets them fix a worst case rate to buy the euros
•It also lets them ‘participate’ if the exchange rate moves in their favour
The participating forward currency option gave them a 'worst case' rate of 1.1430.
At the end of the contract in June, the spot rate was1.20 - higher than their worst case rate. This allowed them to buy half their euros at 1.1430, and the other half at 1.20 – giving them an average rate of 1.1715.
If they’d just locked into a forward contract, they’d have been approximately £3,500 worse off.
However, if the spot rate at the end of their contract had been lower than their worst case rate, they would have been fully protected and would simply trade at their worst case rate of 1.1430.
You don’t have to pay a premium.
If exchange rates move in your favour, the exchange rate you achieve is better than a forward rate.
If exchange rates move against you, you’re protected and can exchange at your worst case rate.
If exchange rates move against you, your worst case rate is slightly worse than if you’d entered into a forward contract.
You can find out more about the currency options we offer here.
Call us on 0800 542 7488, or +44 20 7801 1050. Alternatively arrange for us to call you back.