Currency exchange payments to France
IF you have found your ideal property in France and have agreed a price then you are susceptible to currency exchange rate fluctuations.
Movements in the foreign exchange market can have a real impact, for example if the range in a year for Sterling against the Euro was 1.58 to 1.37, or 13.3%.
This means that a property costing E158,000 might have cost anything between £100,000 and £115,328 - a marked difference.
But there are steps you can take to control the risks involved.
There are many financial organizations that can convert your sterling into euros, and your bank is unlikely to give you the best rate.
Specialist currency dealers will often significantly better your bank's rate ensuring you receive the commercial rate as opposed to the tourist rate.
Case Study: Mr and Mrs Featherstone had been considering moving to France for some time so when a job opportunity came up, they took the plunge and decided to move with their two children.
In January, they placed their house in London on the market and calculated that they would have around £250,000 available to purchase a new home in France.
The Featherstone's soon had their house in the UK under offer, and having seen the details of a number of potentially suitable properties in the Dordogne, the Featherstone's travelled to France to view them.
Having looked at the exchange rate before leaving home, they used (a then) conservative rate of 1.45 (against a market rate around 1.48, or the estate agent's suggestion of 1.50) and established that they could spend around E365,000.
In March they found a suitable house, and signed a contract to secure it. Shortly after their return to England, Mrs Featherstone began to arrange the foreign exchange aspect of their purchase.
The main concern for the Featherstone's was to avoid the risk that the exchange rate would move adversely, before they had completed on the French property. This would at best cost them money or at worst cause them to lose their property.
The Featherstone's did not delay and first of all booked the deposit of E36,250 with their provider which was booked at a rate of 1.4610 (compared to their bank's rate of 1.4435).
At the same time they also bought 'forward' the balance of E326,250 to coincide with their completion date at the end of June.
The Featherstone's motivation was to avoid risk, and their decision meant that they were not exposed to the subsequent drop in the exchange rate from March to June, from around 1.48 to 1.38.
In real terms the total saving was £12,640 or around 5% of the property's value.
If you would like more information on the currency exchange options available to you please complete the form below: