Peter Lavelle at expert currency broker Pure FX
22.11.2011
Thinking about shelling out for a second home in Spain? Then perhaps the sole most important thing that can impact on your cost is the exchange rate you receive into euros.
Imagine for instance that you’re planning to exchange £200k to purchase a villa in Costa Blanca or Marbella. Just a half percent change in the exchange rate can mean €1k won or lost, meaning that, if you get a bad exchange rate, that can make a substantial difference on the affordability of your dream property.
How then do you improve the odds, as it were, to receive an improved rate? To help, we’ve put together a list of 8 top tips, that should make getting a great exchange rate a walk in the park.
Happy strolling!
1. Prepare in advance!
When you’re planning to relocate, you wouldn’t dare leave shipping your things to the last minute, and the same thing applies to your currency exchange. Change into euros at the last possible moment, and you’re liable to receive whatever rate is available at the time, regardless of whether it’s good or bad.
Start researching beforehand though, and you have a chance to find out what’s moving the markets, lock in the exchange rate if it’s favourable, and get some specialist guidance.
2. Set a realistic budget
Like I mention, just a small shift in the rates can mean hundreds of euros won or lost. To ensure you don’t lose out then, it is important to set a realistic budget so that, if the rates take a sudden turn for the worse, you’re not left empty-handed.
3. Don’t get greedy!
With this I mean that, should a favourable exchange rate become available, take it!
The foreign exchange market is subject to sudden ups and downs, like an elevator gone hay-wire, meaning that, though sterling might be on the up and up at one minute, the next it could come crashing down again. Hence it is best to take advantage of superior rates while the last.
4. Consider a forward contract
If you’re not closing on you purchase for some months, it could be worth considering locking in the exchange rate using a forward contract. This means that, if you’re happy with the existing rate, you lock it in, so that, though you might not changing you sterling into euros for some months, this is the rate you receive.
This is a great tool to protect yourself against fluctuations in the rate though. Of course, it does work both ways. The rate can improve as well as deteriorate!
5. Look out for the low of the day!
Exchange rates can swing high and low during the course of just one day. For instance, on 21.11.2011 alone, sterling moved almost an entire cent against the euro! To ensure you receive a superior rate then, ensure you do not exchange currencies during the daily low.
For help with this, just speak to your currency dealer.
6. Use bbc.co.uk and Google to check the rates
To find out the latest rates for yourself, be sure to check on sites including the BBC and Google Finance. These will give you a ball park idea of the rates you can expect.
7. Always request confirmation that your monies have been sent
Once you’ve authorised the transfer, speak to your dealer about requesting confirmation. Our dealers at Pure FX, for instance, can provide an International Transfer Receipt for your peace of mind.
8. Think twice about using a bank
Last but certainly not least, you should think twice about deciding to change currencies with a bank.
This is because, though high street banks provide a range of financial services, they are not specialists, and so rarely provide the best exchange rates. In fact, using a specialist broker can save you up to 4.0% on exchange rates compared to a bank, or up to €8k on a £200k transfer!
Find out more
To find out more about getting great exchange rates then, you can download our PDF leaflet, containing lots of helpful information. You can also visit us at foreign exchange brokers Pure FX. We’d be happy to help!
