AIPP TRANSFERRING MONEY
Transferring
Save yourself some
cash and use a currency
broker rather than a
bank when you send
money overseas
An often overlooked but crucial part
of buying abroad is the transferring
of funds to pay for your new property.
Amazingly, the way you send money
overseas can save or lose you tens of
thousands of pounds.
While your high-street bank will offer
a money transfer service, don’t elect
to use it simply because it seems
convenient. There is another option
– currency brokers, also called foreign
exchange specialists.
Currency brokers specialise in
currency transfers. Because they
trade currency in large volumes, they
can offer rates that are up to four per
cent better than the banks, and they
tend to waive commission and bank
transfer fees.
When you open an account with a
currency broker you are allocated a
dealer who deals with you personally.
Your dealer will not only strive to get
the best exchange rate for all your
transactions, but they will ensure
your converted currency is transferred
26 AIPP CONSUMER GUIDE
money
securely to your designated overseas
bank account. Your dealer will handle
your account over the phone or via
email, and some companies allow you to
transfer money through their website.
Ideally you should choose a currency
broker before you start your search for
an overseas property. That way you’ll
have one less thing to think about when
the time comes to send money abroad.
You should also open an overseas bank
account where you are buying as soon as
you can.
The most straightforward transaction
a currency broker offers is a spot
contract. These are simple, one-off
transactions, usually required with
short notice – they are ideal for deposit
payments as agents and developers
usually require funds quickly to secure
the purchase of a property.
One of the most useful facilities
offered by currency brokers is the forward
contract, a type of ‘buy now, pay later’
solution. Forward contracts allow you
to fi x an exchange rate in advance,
commonly up to two years in the future.
Forward contracts offer peace of mind
and allow you to budget safely. Generally,
a 10 per cent deposit of the total
amount to be transferred is required.
Currency brokers also offer regular
payment schemes, which allow you
to transfer money at regular intervals
between the UK and abroad. As with
forward contracts, regular payment
schemes let you fi x your monthly rate
of exchange in the future. Regular
payment schemes are useful for
making mortgage payments, paying
property maintenance bills, transferring
rental income back to the UK or
receiving your UK pension abroad.
Most currency brokers will offer
less competitive exchange rates for
transactions less than a certain value,
for example, this could be £5,000
or £10,000, and they tend to charge
a nominal fee for electronic onward
payment. How much the fee is will
depend on the speed of settlement
required, as well as the destination.
It’s worth noting that from November
2009 the money transfer market
is set to become regulated by the
Financial Services Authority (FSA).
This means currency brokers will have
to be registered with the FSA, and
operate within the FSA’s ‘conduct of
business’ rules. More importantly for
you, the consumer, currency brokers
will be answerable to the Financial
Ombudsman Service.
Finally, for peace of mind when
choosing your currency broker, check that
your money will be held in a segregated
client account that’s separate and
identifi able from company funds. If
possible, check the company’s credit
rating and ask for customer testimonials.
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