Top 5 Reasons for using a Currency Broker
3 December, 2015
The top reasons for using a currency broker for your foreign currency exchange needs, broken down into 5 parts, explained in layman’s terms to help you navigate your way through the maze. Save yourself time and thousands of pounds in the process.
- Exchange Rates compared to high street banks
- Understanding the market
- Protect yourself against currency fluctuations with forward contracts
- Improvement over banks
- Regular payments
A currency broker can save you up to 4% compared to the high street banks, if you are sending EUR 100 abroad then 4% isn’t a major difference, but if you were completing on a property purchase for EUR 300,000 – you would then see a huge financial impact. For example;
If you had a rate that was 4% lower you would be;
Buying EUR 300,000 at a rate of 1.3632 which would equate to GBP 220,070.42
A loss of GBP 8,802.81
From saving you thousands to helping you through market news releases, a currency broker understands the market. They know which data releases could impact your exchange rate and also keep a close eye and contact you when your desired rate can be met. All this but in an easy to understand, jargon free language, because currency brokers have dealt with thousands of people in your exact same position.
If you do need a 3rd reason to use a currency broker then this one should make up your mind. A broker can protect you against currency fluctuations by using a forward contract. Simply put, once you know the value of your property a rate can be secured immediately and you can lock in your exchange rate for up to 2 years. Usually you would need to pay a 10% deposit to hold the position open but you also have the peace of mind that if there are any market movements, you are protected.
Without turning this article into a bank bashing moment, another reason why currency brokers are superior when it comes to foreign currency exchange is their knowledge and understanding of property purchases. They know you will need to make a deposit payment to the agent or lawyer, they’ll also understand about stage payments and work with you to arrange the correct dates for transfers. Banks on the other hand aren’t training their new members of staff on property purchases in Spain or giving them a detailed market analysis each morning so they are best to inform you. They have a large range of areas they need to cover, so being an expert in one area is left to the professionals, currency brokers.
Once you have completed on that dream home in Portugal or the chalet in Val d’Isère, most currency brokers offer the option of regular payments. Typically all you need to do is setup a standing order from your account to the currency broker, agree a fixed margin and each time a payment goes through, the Euros in this example will arrive the next day in your account. Simple, a service the banks would struggle to offer or compete with. You can also send top up payments ad hoc during the month and these will be processed, no need to pay the £30 transfer cost every single month with your bank, saving you on charges alone £360 a year.
You will probably have enough headaches buying a property overseas without wanting to worry about getting a good exchange rate. If you would like to talk to someone feel free to contact us today and we can start to help save you time and money on international payments.
Tel: 01923 725 725
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