For peace of mind with a fixed exchange rate
A Forward Contract is used to fix and thereby guarantee an exchange rate now, for a transfer in the future – in fact, up to two years ahead.
Commonly used by buyers of overseas property, a Forward Contract can be secured with a deposit of 10% of the selling currency (usually Pound Sterling), followed by the balance of the remaining 90% on or before a specified date in the future. The buying currency (eg Euros) is then transferred by A Place in the Sun Currency to the account(s) of your choice (directly to your solicitor/notary or to your own currency account if you prefer) at the rate initially agreed – no surprises.
When buying abroad, usually an initial deposit will be payable to your solicitor/notary, with a completion payment of the bulk of funds required some months later. Of course, exchange rates can fluctuate meanwhile, making the price of your property in Pounds change on a daily basis.
To avoid the risk of a falling exchange rate increasing the cost of your completion payment, you can use a Forward Contract, and forget about tracking exchange rates.
It’s not unusual for exchange rates to change by 5-10% in a 3-month period, so a completion payment could change by thousands of pounds if you leave things to chance. Using a forward contract removes the risk of your property price increasing beyond your budget – if you wouldn’t buy a property in the UK without knowing the exact price first, why do it when buying abroad?