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Why you need a currency specialist if you’re buying a UK property from abroad - guest article by Barney Cotton from Smart Currency Exchange

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If you’re thinking of buying or remortgaging a home in the UK from overseas, you have a lot to consider – including safely paying what can be significant sums between different currencies.

In volatile times like these, your savings can be exposed to a high degree of risk on the foreign exchange markets. However, with a bit of planning, this risk is easy to protect against. Barney Cotton, Senior Trader at Smart Currency Exchange, explains how.

What are the risks of paying for a mortgage from overseas?

If you’re paying for a mortgage in the UK while living abroad, your money is exposed to the volatility of the currency markets. Even if you have a fixed sum in pounds, what that will cost you in the currency you’re sending it from is constantly changing.

The currency markets never stop moving, but that is the only certainty – no-one can truly predict where they are actually going. There are just too many factors, from headline-making political declarations to niche economic data releases and, of course, rumours and hearsay.

Investors are easily panicked, and rumours of the economy heading in a particular direction, or of the government about to take a particular stance, can lead to a sell-off. That sell-off means a drop in demand for that particular currency – which in turn means it falls in value on the market.

If you have a monthly mortgage repayment of £700, the cost of that in euros between February and March this year would have changed by almost €110. Over the course of a mortgage, this can add up to a significant extra cost. Not only that, but it just makes it difficult to budget: how can you when you do not know how much your essential expenses will be each month?

How can you protect against these risks?

Fortunately, as complex as the currency markets are, the solutions are quite simple. If you send your money with your bank on the day, you take the gamble of a sudden drop causing you to pay much more than you’d expected. This is where the services of a currency specialist are crucial.

At Smart Currency Exchange, as specialists in international property purchases, we can help secure you a fixed exchange rate with what is called a forward contract. In essence, this means that you agree with us how much money you will want to send in the future over a specified period – usually up to twelve months – and tell us that you want to keep the day’s exchange rate for that entire period. We can then purchase that money on your behalf, on payment of a deposit, and hold it for you until you need to make your payments through the year.

In other words, even if the markets suddenly drop, it won’t affect you. You will pay what you agreed, and could well find yourself significantly better off than buyers who didn’t plan ahead.

A simple example is last year’s Brexit ups and downs. My clients who protected their money in April for a July/August purchase found themselves about 5-6% better off than if they hadn’t – and we may well see the same this summer with the volatility from the coronavirus pandemic.

To find out more about how to safeguard your funds for an international purchase, and to start protecting your money today, register with us at Smart Currency Exchange. There’s no obligation to trade, and you will be assigned a named Personal Trader who will discuss personalised solutions for your situation and budget. 

Click here to contact Smart Currency Exchange or call 0808 163 0102.


Content provided by Smart Currency Exchange. All Rights Reserved.

Smart Currency Exchange Limited is authorised by the Financial Conduct Authority under the Payment Services Regulations 2017 (FRN 504509) for the provision of payment services.

Registered in England No. 5282305. Smart® is a registered trademark of Smart Currency Exchange Limited.

As seen in
sunday times telegraph financial times bbc news the express the times
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