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Buying Overseas Property Case Studies

When purchasing a holiday home abroad, the foreign exchange rate can significantly alter the price of the property. World First can help in two ways:

Immediate (Spot) Transaction

Mr. Johnstone bought a house in Spain that cost €240,000 on the 20th October 2008. He needed to make an immediate transaction (know as a "spot" transaction) to purchase the property. He initially sourced an exchange rate from his bank and then compared it to an exchange rate he obtained from World First:

	Retail Bank	World First
Exchange Rate	1.2795	1.2930
Transfer Fee	£30	£0
Total Cost	£187,603	£185,614
Total Saving	£1,989

Forward contract Transaction

Mr. Jones agreed to buy a house in February that cost €350,000 with payment due on the 14th November. Between the 14th February and the 14th November 2008, the sterling to euro exchange rate moved from 1.3214 down to 1.1620.



When Mr Jones agreed to buy the property, the cost using the exchange rate in February was: £264,870. If Mr Jones had waited until November and used the exchange rate then, the cost would have risen to: £301,204, an increase of over: £36,334.

In fact, Mr Jones, entered into a "forward contract" with World First, which enabled him to fix the exchange for his November transaction in February.

	Euros	Pounds
Cost of Property (February exchange rate)	€350,000	£264,870
Cost of Property (November exchange rate)	€350,000	£301,204
Cost of Property (November rate "forward contract" fixed in February)	€350,000	£265,755

With the forward contracts we offer, you can have peace of mind knowing that irrespective of exchange rate movements, you will always have a fixed sterling cost.