I’m buying off-plan. How can HiFX help?
When buying overseas property, you’ll have to make one or more international money transfers to complete the purchase.
The issue needs serious planning especially if you are buying a new development off-plan where you will be required to make a number of stage payments during the construction of your property.
Example: UK resident buying in Spain
For illustration purposes, let’s assume that you’re a UK resident buying a holiday home in Spain:
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The developer will require an up-front deposit in Euros and then further stage payments during construction over the next 18 months, with a final payment upon completion.
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Whilst you know the price of your property in Euros, the actual cost in Sterling will be determined by the exchange rate you obtain.
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If Sterling strengthens during construction the cost will decrease, but if the Euro strengthens, then your Euro costs will increase i.e. a stronger Euro means your overseas property will be more expensive.
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As a result, until you’ve secured an exchange rate, you won’t know the final cost.
Whether you’re buying in Spain, Florida, Dubai or any other country the principles are the same.
Removing risk with a forward contract
To remove this risk, many of our clients buy a forward contract. This is essentially a buy now, pay later option, allowing you to lock into an exchange rate even if you don’t have all the funds available. Should the rate get worse, you will not be affected.
If however you have access to all of the funds from the start and want to convert them immediately, you can enter into a spot contract. Unlike a forward contract this is a buy now, pay now option, and you will need to arrange the immediate transfer payment for the full value of the currency bought or sold to HiFX.