Many of those looking to buy a home abroad or to make regular payments to their new home country can be completely mystified by the whole concept of moving funds abroad. How do they know when to act, where can they find out how to deal with banks, can they use specialists to exchange their money at the best possible rate? Martin Thomas talks to Giuliano Bucci of Ebury Partners to get some answers.
“A foreign exchange specialist is the common alternative to a bank – and they have particular relevance for those looking to buy overseas property,” explained Giuliano.
“If you’re spending large amounts of funds abroad, then property purchasers will need to transfer their money into the local currency before they do so. Typically they should do this at a bank, but the truth is that the exchange rate they’ll receive from a bank is extremely uncompetitive when compared to what they should receive from a foreign exchange specialist.
“For example, here at Ebury Partners we can save them up to four per cent over what they would get with a bank – and on a £200,000 property that adds up to £8,000.
“A foreign exchange specialist will be able to point clients towards certain tools that take away a lot of the risk that is inherent in the process of buying foreign currency – namely the fluctuating exchange rates – which can have a huge impact on how much value they get from their purchase.
“Buying a home abroad will be one of the biggest purchases of their lives. For many banks and specialists, they are simply an account – easily handled but quickly forgotten about. A lack of transparency is another complaint we often hear when discussing foreign exchange experiences. “Ideally clients will want to deal with the opposite type of company – a specialist who understands their fears and requirements and will talk them through the process and offer guidance.
What are the tools that help to cut out risk?
Giuliano continued: “Every client at Ebury Partners is assigned a dedicated consultant, who will always serve as that client’s one point of contact with the company, strengthening their relationship with total understanding of the client’s circumstances and goals.
Forward Contracts: these are the most common tool. They allow clients to purchase a currency for delivery at a later date but at current market rates, so if it seems that a currency will move out of the client’s favour, we can mitigate any risk. All that’s required is a deposit (typically 10%) with the rest paid upon delivery, so cash flow is left relatively undisturbed.
Stop Orders: Most foreign exchange specialists will also offer stop loss orders, which is where clients detail a specific rate they will go no lower than, rate-tracking services, where a consultant will alert them as to any large market changes and alerts and explanations to data releases that may have an effect on a currency’s worth.
Example: A common scenario would be somebody wishing to buy a house a year in the future. While a dramatic example, before the credit crunch a client could purchase €1.55 for the pound sterling, afterwards, they would receive €1.1 for the pound – roughly a 40% increase on the price of any property they would be buying in euros.
“Talking to a consultant for a rate comparison – or even opening an account – puts a client under no obligation to make a transaction. We can be contacted at www.eburypartners.com for anyone looking for more information and we’ll be happy to have an initial conversation.”