One in three people buying property abroad would struggle to do so with a 5% loss on the pound. That is exactly the loss we’ve seen in the last month – and we will likely see greater volatility as the Conservative leadership selection gets underway. However, with careful planning, you can still your achieve your dream of a life overseas.
Greater volatility on the horizon
May certainty wasn’t a quiet month for the markets, with a 5% loss on the pound, dropping from 1.17 to 1.12. That doesn’t look like it’s going to stop any time soon. A new Prime Minister, the budget crisis in Italy, a general economic slowdown, and a market that can drop suddenly on the basis of a single Tweet: there’s a lot that can push the pound any way in June. And no-one, not even the banks, can truthfully tell you what will happen with any certainty.
According to our partner Property Guides’ recent survey, around one in three overseas buyers say their purchase would be impacted by a 5%+ drop. So, if you’re in that group, how can we help you?
Certainty amid increasing uncertainty
Luckily, protecting your money against this risk is simple (no wonder two thirds of Property Guides’ readers are already doing it, according to their recent survey!).
The key is a forward contract. This locks in a fixed exchange rate for you for up to twelve months. In other words, we guarantee you see the same exchange rate throughout this period, no matter what the live markets do. Even if a 5% drop becomes a 7% drop, or even a massive 10% drop, you can sit back and relax, safe in the knowledge that your costs won’t change.
No-one has ever regretted being too prepared, so do take just a few minutes to protect against a year’s worth of risk to your finances.
Imagine you’d bought a €300,000 house in May. Without a forward contract, the cost of that €300,000 would have changed from £255,000 to £266,000. With a forward contract, even after the pound dropped 5%, you would still pay £255,000. Nothing would have changed – because you took a few minutes to plan ahead.
As one reader, who purchased in France two years ago, told us, ‘Smart really helped me to control the risk and safeguard my budget. It was just before the Bank of England was or wasn’t going to hike interest rates up. It could have made the difference between my house costing £83,000 – which it did – and £87,000. It’s a massive indication of how important what you at Smart do is.’
How does it work?
Simply give your Personal Trader a call on 020 7898 0541 to discuss your transfer. We’ll discuss your needs and agree on the contract, including its duration. With that, you’ve protected your money against the risk of international transfer.
If you’re buying a home abroad, do this as early as possible before your viewing trip. That way, you’re ready to send your money immediately for a reservation deposit when you find the perfect property. And if you have already moved, and know anyone else also moving who hasn’t protected their money already, don’t hesitate to introduce them to us. You will earn yourself Smart rewards as part of our referrals programme!
No-one has ever regretted being too prepared, so do take just a few minutes to protect against a year’s worth of risk to your finances.
