12 Dec at 9 AM
Big foreign exchange decision?
Just ask the FX Experts at TorFX for a Quote
Making sure you do your research
on the various foreign exchange transaction types is key to ensuring
a the long term stability of your property purchase and making sure
it's a sound investment. Foreign currency exchange deals include:
- The first point we will
discuss is spot transactions. Spot Transactions are typically used by
individuals who would probably already have the funds in place to purchase
their property abroad. These are simply the exchange of one currency
for another at the current market price where the settlement happens
within two working days. This is generally done using a foreign exchange
broker or a bank.
- For people who are looking
to pay in the future, some people use forward transactions. A foreign
exchange forward transaction is a contract to exchange a specific amount
of one currency for another on a future date at a predetermined rate.
These can be arranged for any period of time - from three days to two
years in the future. A deposit is required to hold the rate with the
balance of the payment made on the settlement date.
- Currency options are also
quite similar to forward transactions. Like a forward transaction, a
currency option allows you to exchange a specific amount of one currency
for another on a future date. However, rather than setting the exchange
rate you will transact at, you can guarantee a worst case scenario rate,
but also benefit if the rate moves in your favour. There are a number
of currency options available and the right one for you can be tailored
to your specific needs and appetite for risk. Currency options can be
arranged for any period up to two years in advance. Some options require
a premium and others are zero cost.
- Finally, many people whether
paying their mortgage or sending money to a different country may need
to send regular international payments. If you are taking out a foreign
currency mortgage on your overseas property, you will need to make regular,
smaller payments. But the costs could still add up if you don't shop
around for the best foreign currency exchange rates. Currency specialists
offer a regular payment service where exchange rates and fees are low.
In fact, you could save hundreds of pounds every year if you make your
regular currency transfers through a specialist currency brokerage such
as World First rather than with your high street bank. It is worth noting
that most of the above transactions cannot be made through the bank
either, and you would need to talk to a specialist currency broker to
see what would be best for your specific needs. Using a broker will
also allow you to receive commercial exchange rates, personal service
and professional market knowledge otherwise reserved for major global
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