When and how do I change my pounds to Euros?
If you are looking to change large sums of money from pounds into euros over a broad time scale as you would when buying your French property then you should think about ways to get the best deal and safeguard your cash against exchange rate fluctuations. There are two ways of securing yourself an exchange rate:
This contract is suitable for those who wish to change their money immediately (settlement within 2 days) and is the simplest and quickest way to buy currency. If you already have your money and are happy to receive the interest that a Euro bank account will give you then this is a good option. Or you may feel that you would like to leave what money you have in your domestic account to accumulate interest and only change your money just before the signing of contracts- this can be risky, however, as the Euro and pound fluctuate in value leaving the final price in pounds uncertain.
The forward contract
This is the safer option as it allows you to fix the exchange rate for up to two years in advance and gives you peace of mind as you know exactly what you will be paying for your villa or apartment in France so that you can budget your finances without any nasty surprises. Hence it is especially useful when buying properties off-plan with 3 or 4 stage payments of 18 months so you don’t end up going over budget. Also, because you don’t have to pay for the Euros until the maturity date it frees up any money you have and gives you some time to arrange the finance. All you will have to pay is a 10% deposit of the amount you wish to buy with the balance due on maturity of the contract.
This forward contract is also useful if you receive a pension in pound sterling but live in France. In this case you may want to be sure what your monthly income will be up to two years in advance so that you plan your finances. Also, if a French mortgage is paid for out of a pound sterling bank account you can ensure that the monthly outgoings are the same each month by entering into a forward contract.
If you can afford to take the risk and speculate on the foreign exchange market in the hope of paying a lower price for your property then it may simply be best to buy the Euros spot as and when you need them but for most people the second option makes more sense.
Who do you use?
You have two options: either use a regular bank which you are comfortable with which may not always offer the best deals or engage a recommended currency specialist that focuses on this service and could well offer you better rates of exchange and more service. Either way, your money is precious and like most people what you really need is piece of mind and to leave the risk taking to the professionals.