By: VIKKI HILL
Vikki Hill is the Head of Operations for Foreign Currency Exchange in The Algarve, providing advice to UK and European expatriates in Portugal.
NOW IF you’re a bit like me and you’ve been keeping a watchful eye on the news over the course of the last few weeks, you may have noticed that the only two stories of any real interest seem to be how the credit crunch is hammering the exchange rates – and the Brown leadership debate.
Unfortunately, the only comparison I can draw between the two is that at the moment, the euro appears to be about as reliable as the position of the current Prime Minister…
Nevertheless, we have to face the fact that buying overseas property is becoming an expensive business. UK purchasers should brace themselves over the coming weeks as the Bank of England prepares to drop UK interest rates in order to fend off any possibility of a recession. Sterling weakness has continued to dominate the market, which is keeping the exchange rate low and, unfortunately, making it expensive to pay for property in Europe.
It’s never easy to save money on the purchase of an overseas property, particularly when currency markets are in such a state of flux, but there are ways in which you can take control of the situation and make sure you get the best deal. By following a few simple steps, you can still buy the home of your dreams, without the worry of negative exchange rate movements increasing the cost of the property itself.
We all know that markets have the ability to rise and fall, and as the exchange rate changes, so will the overall cost of your property. Working to a budget is practical, but make no mistake, it’s the uncertainty that makes people sweat. Compare it with buying a home in the UK – would you prefer to know the final price of the property before you buy? Or would you take a gamble?
It’s important to remember that there are ways to protect your overseas budget and to get the best price for the property that you’re interested in buying. As such, we’ve come up with a few easy steps to help you get the best deal in the current market.
Drive a hard bargain – because of the strong euro, it’s a buyer’s market, so negotiate on the price you want to pay for your property.
Buy your euros now! Experts don’t expect the currency markets to stabilise within the next 12 months, so if you need euros in the near future, don’t hold out. It could well prove to be better to buy now, before the exchange rate gets worse.
Take out a forward contract. A forward contract is a ‘buy now, pay later’ solution that enables property buyers to fix and hold the exchange rate for a period of time. Fixing the exchange rate in times of uncertainty will protect your property price against exchange rate fluctuation.
Speak to a professional. It’s no secret that currency brokers exist because they have the ability to undercut High Street banks on the exchange rate. A good broker based in the city will have their finger on the pulse and will ensure that you’re aware of current market conditions and exchange rates, and will be able to offer you specifically tailored solutions to meet your individual currency requirements. Good service costs nothing.
In conclusion, the number of people still looking to settle in the sun remains high, cementing the fact that demand for overseas property remains strong, despite the fact that exchange rates have changed significantly over the course of the last few months.
For further information contact the Portugal branch of the Foreign Currency Exchange. Tel: 914 338 799 or 289 543 808. Email: [email protected]