Dec 18, 2023 / NEWS / INVESTMENT

5 foreign exchange services that can save you time and money

It might not be as exciting as choosing the ski resort, or furnishing and decorating your new home, but managing your currency effectively is key to a smooth buying process. Today, we’re looking at five foreign exchange services offered by Smart Currency Exchange. These services save you both time and money, while offering you peace of mind.

1. A personal trader to help you understand your budget

Front room in ski chalet in Valmorel, France.

Considering purchasing your property through your bank? One of the major differences between purchasing via your bank and via Smart is the absence of a personal trader when you fight your way through a bank’s call centre. When you sign up to Smart, you’ll have a free telephone consultation with an experienced currency specialist. One of the most common pitfalls of buying an overseas property is lack of financial planning, which exposes the buyer to more risk than they bargained for. Your trader will discuss your options and appetite for risk and suggest the best steps forward. So, it is advisable to contact Smart early on, even if you are a couple of years out of buying. They’ll touch base with you every once in a while and see how your plans are progressing.

2. Clarity on how exchange rates could impact your budget

Although buying in a language different to your mother tongue and dealing with foreign law can be challenging, one of the biggest potential hurdles of buying a ski chalet is the exchange rate. Currency markets are in a constant state of fluctuation. They are impacted by factors such as inflation, interest rates, and budget announcements. In recent years, events like Brexit, Covid-19 and the mini budget have seen wild changes to the value of the pound. 

Finding the perfect ski chalet, to putting a deposit down, to turning the key in the lock can take months. In this period the exchange rate can move against you. You could find your dream French ski home for €1,000,000. During the buying process, the pound to euro shifts from €1.17 to €1.12, meaning that on the day you have to complete your property now costs you more than £38,000 extra. 

To complete on your home, you’d either have to suddenly come up with a large sum of money that you had not planned for, or in some cases, abandon your plans altogether. Your personal trader can help you come up with a suitable plan that will prevent either of these outcomes, but only if you plan for it in advance.

3. Forward contract.

Exterior of a ski property in La Thuile, Aosta, Italy.

Following on from discussions with your personal trader about the risk you are willing to take with your budget, about 70% of buyers choose to opt for a forward contract. This enables you to lock in an exchange rate with an agreed end date up to twelve months away, ensuring that however the exchange rate shifts, your budget stays the same. For the most part, buyers choose to book a forward contract when their offer has been accepted. But if the buying process lengthens or you are purchasing a new build that is in development, you will normally be able to extend it.

4. Market order (also known as order to buy)

Some people opt for a market order, though this is better suited to those open to more risk with their currency exchange, as it involves taking a gamble on the rates. When the market hits the rate that you’ve budgeted for, Smart will exchange it for you. The order is automated and runs 24/7 on the market, so it could trigger even when you’re in bed!

5. Regular payment plan

Front room of a ski home in Cortina d'Ampezzo, Belluno, Italy.

A regular payment plan comes in handy after you have purchased your ski chalet. It enables you to set up automated payments to cover ongoing costs such as a mortgage, pension and maintenance. Once you have set it up with your personal trader, you don’t have to worry about remembering to make the transfer. Smart are able to send funds straight to your European bank account. Plus, you can arrange a regular payment plan with a forward contract to make the payments even more predictable.