Using a foreign exchange
specialist is one of the easiest ways to save money:
You can save up
to 4% on the price your your house. As an example, on a €300 000
house, you could save €12 000 with just a few minutes
work.
You can save up
to 10% on your monthly expenses. As an example, if your monthly
expenses are €3000 euros (£2000 pounds), you could save up to €300
euros per month on your monthly payments. This also includes
Pension and Mortgage transfers.
Fortunately, you can
do both with about 30 minutes work. For maximum savings, this should
be done well before buying your house. For more information, see
below.
What is Currency Exchange?
The currency in
France is the Euro (represented by the symbol €). If you are buying
a house in France, you will need to convert your money to euros to
pay for it. Likewise, if you are visiting France, or living in France,
or paying for the upkeep of a property in France, you
will need to convert money to euros to pay your living costs.
There are many places
which will do the currency conversion for you. These include banks,
travel agencies and currency exchange booths (at airports and
elsewhere). When exchanging money, each of them will give you
somewhat fewer euros than your money (dollars or pounds) is actually
worth. The difference between what your money is worth and what you
actually receive is their profit margin.
Of course, your aim
is to get the best exchange rate possible for your money. In
general, travel agencies and currency exchange booths give poor
exchange rates, so your euros cost more than they should. Banks
provide better exchange rates, but still not as good as the best
that is available. Best of all is to use a 'currency
exchange specialist', which will provide you with better value for your
money than any of the other alternatives.
What is a Currency Exchange
Specialist?
A currency exchange
specialist is a company that specialises in currency exchange. In
general, they offer much better exchange rates than banks. On large
sums (for example, the purchase of a house) you can get up to 4%
more euros by using them rather than a bank. On small sums (for
example, monthly living expenses) you can get up to about 10% more
euros than using a bank. There are several reasons for this:
Unlike a bank, a
currency exchange company specialises in currency exchange. As a
result, they can exchange money very efficiently.
Competition among
currency exchange companies is very strong, as knowledgeable
people will look around for the company that offers the best
exchange rate. In the case of banks, there is little competition
as they get most of their business from people who have existing
accounts with them and who simply use their bank rather than
looking around for the best rate.
Currency exchange
companies normally do not charge any additional fees (except
when the amount being exchanged is small). Banks often charge
various additional fees, on top of offering a mediocre exchange
rate. If you use your bank to transfer money to France (rather
than taking it in cash), you may end up paying additional
transfer fees to both the sending and the receiving banks.
Like banks, currency
exchange companies are regulated by the government Financial
Services Authority in the UK (in other countries, they are regulated
by equivalent organisations). Also, like banks, to use them you must
register (this can be done within half an hour). Your currency exchange company can convert money
to and from any major currency, and transfer money for you to or
from banks in UK, France and elsewhere.
What Services?
A currency exchange company
offers a number of standard services:
Currency
Exchange. Same as at a bank, but you normally get a
substantially better exchange rate and do not pay additional
fees (except on small amounts).
Transfer.
You can transfer money (in any major currency) to and from bank
accounts or individuals. Again, this is normally cheaper than
banks and a lot faster.
Regular
Payments. You may need to have money converted and/or
transferred on a regular basis (for example, living costs,
pensions, mortgage payments or
school fees). You can arrange for the currency exchange company
to do this for you automatically (for example, through a
standing order or a direct debit).
Currency
Guarantee. If you are buying a house, you may be signing a
contract now but paying months later. During this time, currency
rates can go up or down. For example, the price of buying Euros was 1.5115 to the pound
on the 1st February 2007; and just three months later, on 1st
May 2007 it was 1.4645 to the pound. (Source: RationalFX).
Consequently, the cost of a €200 000 increased from £132,318.89
to £136,565.38 (an additional cost of £4246.49). With a currency
guarantee, you can protect yourself from such changes.
In additional to
these standard services, some companies offer additional services
such as:
On-line
banking. This allows you to do your currency exchange,
transfers, standing orders and direct debits on-line. Also, to
see your statements on-line.
Mortgages.
Some currency exchange companies also offer mortgages. Taking a
mortgage from a currency exchange specialist may result in
substantial savings if currency conversion is required.
Preparation is Important !
If you are looking
for a property in France, the natural tendency is to focus on
finding the right property and then to sort out the administration.
Unfortunately, many people find this is a very expensive mistake.
For example, consider
the case where someone finds the home of their dreams and decides to
immediately put a deposit on it. If they haven't set up a currency
exchange account in advance, they will be in the position where they
have to pay the deposit from their bank account and use their banks
exchange rate (along with transfer fees). The standard deposit is
10%, so on a €200 000 property this would be €20 000 and a 4% loss
on the exchange rate means an immediate loss of €800. If in the
excitement and pressure of sorting everything out (house inspection,
lawyer, notaire, mortgage, final sales deed, and so on) they end up
using their bank for the remaining payments, total currency exchange
losses can easily reach €8000 (in some cases, even more).
Alternatively, taking
a bit of time to set up a currency exchange account in advance can
save all this money. There are also the additional savings in terms
of currency exchange for monthly expenses. Setting up an account is
free and without obligation, so it is wise to do this in advance.
We've worked with a
number of currency exchange providers and have picked one which we
consider a leader in terms of :
Competitive
exchange rates
Personalised
service
Extra services
(e.g. on-line banking, Euro mortgages) that many others do no
offer
If you would like
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