Undoubtedly, buying a ski property is a big purchase, and the last thing you want is to lose any money unnecessarily during the process because of fluctuations in exchange rates. The solution is to lock in an exchange rate with a Forward Contract, as recommended by Smart Currency Exchange.
The impact of exchange rates on your ski home.
What makes purchasing a ski chalet uniquely challenging to buying a home in your own country? Exchange rates! As a consequence of economic and political events, exchange rates fluctuate every day. This adds a unique set of risks to buying overseas, as the price of your dream apartment in the French Alps could change, dependent on the value of the euro. Equally, your dream ski chalet in Aspen could change, dependent on the value of the dollar. This makes budgeting for your ski home very difficult.
For example, you could have your eyes on €1,000,000 chalet in Italy. Then, due to some economic data changing the value of the pound to the euro from €1.15 to €1.10, your ski chalet now costs you an extra £39,000. This could mean that you have got to spend far much more than you were intending to. It could even put an end to your property plans entirely, which can be expensive if you’ve committed to a purchase (as well as heart-breaking).
Buying abroad takes time – and in that time, currencies fluctuate.
To complicate matters further, purchasing a property overseas can take a little longer than buying one in your own country. Firstly, it is not as simple as driving down to see a couple of homes that you like, and even revisiting if you are not sure. Instead, you will have to book a viewing trip of about four to seven days, where you fly out to Austria or Switzerland, and you go not for pure pleasure, but to look around properties.
You will also need to find a good estate agent – especially vital if you do not know the area you are buying in intimately, as they can give you useful insider knowledge. You will also need an effective, possibly bilingual property lawyer to help you with the buying process. While it will be worth it in the end, all of this takes time. And in that time, currencies fluctuate. That ski chalet in Italy you had your eyes on has drastically changed price.
How can a Forward Contract help?
A Forward Contract enables you to lock in an exchange rate for up to twelve months. This mean that the unpredictable economic variables of the world will not have an impact on your ski home. It eliminates the need for you to be constantly checking exchange rates, wondering when a good time is to buy. Crucially, it means you that you will be able to budget effectively, as the price of your ski home will stay the same over those twelve months. To lock in a currency, you pay a small deposit now and the rest later. It is a brilliant way to safeguard your finances.
Mar 22, 2024
