I am hoping to buy a house in Brittany in the next six months. Should I use a currency company or a bank to buy the euros for the purchase? Mrs Kathleen Griffin

Answer:

It is worth contacting your bank to find out what rate they offer you for future comparison, however as a rule of thumb a currency specialist will provide you with a much more competitive rate. Research shows that based on the average cost of an overseas property being £150,000, using a foreign exchange specialist rather than a high street bank could save you around £3,000.

Unlike the banks, foreign exchange specialists work solely in the currency markets and are therefore better able to pass on savings from buying in bulk directly to the customer. Also, depending on which company you use, there is a lot of money to be saved on transfer and commission fees, which some currency companies will not charge you for.

In addition to saving you money through better rates, many foreign exchange specialists also offer a range of services designed to both save you money and remove some of the stress of trying to second guess what the currency markets are likely to do. Exchange rates fluctuate minute by minute, making it difficult to work out exactly what the final cost of your property will be. One way to get around this is by using a ‘forward contract’, which allows you to fix a rate for up to two years with a small deposit. This means that you know exactly what the final cost will be by the time you complete on your property and also enables you to ‘lock-in’ a particularly favourable rate.

A good currency company will also have a ‘regular transfers’ product that could help you save up to £300 a year on transferring money between your UK and French bank accounts, be it for mortgage payments, transferring your pension or simply paying maintenance fees on your property. Most banks charge an average of £27 for each transfer, whereas the majority of specialists do not charge for this service.

Before investing any cash, it is crucial to invest time when deciding which company to go with. Here are a few guidelines on how to ensure complete confidence in whatever company you finally settle on:

Research

A simple Google search can tell you a lot of what you need to know about a company in order to determine whether or not you trust them with your money. Look out for things such as whether or not it has won any awards or if it has been recommended by a reliable source. Ask any friends who have bought abroad who they used to transfer their money. A recommendation from a trusted source can prove invaluable, as a good reputation by word of mouth is one of the most vital and sought after characteristics any company can have in its favour.

Financially Strong

Over the past ten years the commercial foreign exchange industry has grown from just one company to close to 30, with much of this growth coming in the last few years. I would strongly advise that you ensure that the company has at least three years of audited accounts, and ask the dealers exactly where your money will be held during the transaction

No pressure

One of the most important things to remember is not to let a foreign exchange company pressurise you into doing a deal. Make sure that you are able to speak directly to a foreign exchange specialist with a genuine desire to understand your needs. The dealer’s role is to appreciate your requirements and to provide you with the information that you need, not to hard sell and certainly not to push you into trading until you are 100% happy to go ahead.

Finally the most important piece of advice I can give is to do your homework well in advance of the purchase, including the legal and budgeting aspects as well as currency exchange. This will help everything run as smoothly as possible, enabling you to enjoy your property once you have purchased it.

Phil McHugh is a senior executive dealer at Currencies Direct, the foreign exchange specialist. www.currenciesdirect.com