You don't want to make a mistake buying a home abroad if you are retired. So consider these top currency tips to avoid sky high bank charges and ensure a smooth financial move
Before you get started, consider some of the key financial points that will help you calculate the maximum you can afford. For example:
• The total budget you have available for buying a property
• How large a deposit you can afford, and what your repayment plans will be
• Potential re-mortgage of a UK property to release equity
• Additional taxes and fees that come with buying a property
• Maintenance and lifestyle costs
• Foreign exchange rates
Once you have calculated these figures, you can set a price band on the houses available for you to choose from. Keep in mind the following five tips to save money when buying property overseas and dealing with cross-border transactions.
1. Financing a property overseas
There are a number of ways in which you may be able to pay for your new property abroad, either by re-mortgaging your current home, paying cash, or taking out a loan.
Buying a property is fairly straightforward. However, as this is probably one of the largest and most significant purchases you will ever make, you should not proceed without appointing your own solicitor. Their responsibilities include advising and representing you through the whole transaction process.
2. Make the most of exchange rates
As a UK resident, when making overseas transactions you’ll have to navigate the fluctuations of the currency markets. These could swing in your favour one day, and then heavily against you the next. Timing can be key to saving you hundreds – perhaps thousands – of pounds, especially on the value of a house. A forward contract allows you to secure your currency at the rate you want and lock it down for up to a year. This protects your finances from any fluctuations in the market.
There are a number of different ways to transfer money overseas – and most people head straight to the bank. The best option is to seek the guidance of a currency specialist, like Currencies Direct, which would save you up to 5% compared to your high street bank, because they don’t charge transfer fees and give you a better exchange rate. This translates into a saving of up to £5,000 on every £100,000 you transfer. When we’re talking property prices, this can mean significant savings.
4. Stay on top of market moves
The currency market is always fluctuating and rates move all the time. If you have a target exchange rate in mind, why not set up a Rate Watch? Currencies Direct assigns a team member to monitor the markets and notify you when the rate becomes available. With a Rate Watch, you can set up as many searches as you like and leave the rest to them.
Most importantly, when your desired rate hits, you’re under no obligation to actually trade. It’s just a great way to keep up with what’s happening in the currency market, so that you know when the best time to make your transfer is.
5. Careful financial and tax planning
Take into account your entire worldwide estate when you look at buying property overseas. If you’re moving abroad, think about whether your other assets will continue to earn you the maximum amount of income or interest possible.
Sometimes it’s to your benefit to transfer a large UK cash balance offshore, because it could free up your UK tax allowances. A spot contract lets you agree an exchange rate (online or by phone) based on the current market rate. It’s the quickest and easiest way to send money abroad.
Currencies Direct is one of the world’s leading foreign exchange providers. When you need to send money overseas, or receive funds in other currencies, they can make sure that you get the best possible deal with no hidden charges or fuss.
Whether you’re transferring a large one-off sum to buy a property overseas, or setting up regular payments to receive a salary or pension, they could save you up to 5% on all your overseas money transfers compared to your high street bank.