Financial Advice

(Catharine Higginson) #1

Matt Prevost has been a member of the SF network for a while now and he has kindly offered to advise SF members who have concerns or queries about currency transactions. Please feel free to send Matt a message via the network or start a discussion and he will then respond. In the meantime, here are his thoughts on why you should use a specialist foreign exchange dealer

Convert your currency exchange and turn a chore into more.

As if buying property wasn’t fraught enough, when you purchase overseas, you not only have to deal with the intricacies of foreign conveyancing laws and processes, but there's the added factor of the currency exchange rate. For some people this is no more than an irritation; just tell the bank where to send the money and they will convert it into the right currency and make it happen, but if you take a step back from that process, you may see it in a wholly different light.

Firstly, when should you make that transfer? With exchange rates as volatile as they are, an ill timed transfer could rob you of a lot of money. Just ask those who rushed into buying Euros with their Sterling around the middle of May only to find the Pound gaining 8 percent in the weeks that followed. Or ask those who bought a property in early February but delayed their payment until the last day of the month, only to find they had lost 6 percent in a matter of days. In both instances, if they had timed their currency transactions well, overseas property purchaser would have seen their €250,000 dream property cost £12,000 less!!! These sorts of fluctuations are common. If managed well, these become a fantastic opportunity to secure the value of your new investment but poorly managed or left to chance and they can remove the first year’s earnings from a buy to let or snatch a year’s worth of property value appreciation, before you have even got the keys.

Secondly, why use a bank? High street banks are simply not equipped to answer questions about exchange rate timing, market conditions or sentiment amongst traders. All of these things are vitally important to make the most of your exchange rate conversion. And the profit margin that high street banks will make from currency exchange is far greater than a specialist broker. In fact it is not uncommon for someone transferring hundreds of thousands of pounds to have the tourist rate applied to their transaction. This is the exchange rate set for conversion of small amounts of cash for holiday or business travel and is generally set at a profit margin (or spread) of 0 to more than 5 percent. That represents a considerable difference, and could be the answer to having that dream swimming pool!

Thirdly, in order to properly manage your currency exchange, you need access to the tools of the trade; tools usually only available to financial market professionals but which are made available to property investors by specialists like Halo Financial. These include the ability to set an exchange rate today but delay the actual exchange of funds by up to two years; making it easy to budget for your property purchase, development costs or stage payments. Halo Financial can also help you to capture the very best exchange rate, even if you are not contactable when that exchange rate is available in the market. The use of automated orders which operate around the clock mean you can rest easy knowing your targeted exchange rate is constantly monitored. And crucially, Halo Financial will ensure you receive exchange rates that don’t rob you of value in your investments.

Above all, I would urge you to consider the currency aspect of your property purchase as an opportunity to manage risk and take advantage of opportunities rather than a chore. And I would strongly suggest that you speak to a Halo Financial Consultant to appraise the best way for you to manage your currency in light of your particular circumstance.

For a free, non-obligation assessment of your foreign exchange needs and an explanation of the best way to manage your currency transactions, please use the contact button below.

Halo Financial - Contact Us